Cowboy Ventures, the now-10-year-old, Bay Space-based seed-stage centered fund based by famend investor Aileen Lee, has closed on two new funds totaling $260 million in capital commitments. The outfit garnered $140 million in commitments for its fourth flagship fund and one other $120 million for its first opportunity-type fund (its “Mustang Fund”).
The quantity is greater than all of the capital that the outfit has raised throughout its earlier funds, which had been sized at $40 million, $60 million, and $95 million, respectively. Then once more, the group has grown over time from being a one-person agency to an outfit with an investor group, together with fintech specialist Jill Williams, who Lee recruited from Anthemis, and Amanda Robson, who was pulled out of Norwest Enterprise Companions, the place she labored with quite a few enterprise software program corporations, together with some centered on AI and robotics. (Longtime Silicon Valley lawyer Ted Wang can be intently related to the fund as a “board companion” and advises greater than a dozen of its portfolio corporations.)
It’s straightforward to understand why LPs dedicated extra capital to Cowboy, even in a market that appears to be actively shrinking given broader market turmoil. In the beginning are its numbers, which look good, specific given the dimensions of its earlier funds. Cowboy was among the many first buyers in Guild Training, for instance, a web based schooling firm that’s centered on upskilling frontline staff, and was valued at $4.4 billion when it closed its most up-to-date spherical of funding in June of final 12 months. Cowboy can be a seed investor within the safety and compliance automation platform Drata, assigned a $2 billion valuation in December when it raised $200 million in Sequence C funding.
In dialog with Lee, Williams and Robson late final week, Lee famous that Cowboy thinks of itself as a generalist agency, however that 70% of its most up-to-date fund was funneled into enterprise startups and 30% into client startups, given Cowboy has additionally loved success with the latter. (Most notably, certainly one of its first checks went to Greenback Shave Membership, the boys’s grooming firm acquired by Unilever in 2016 for a reported $1 billion.)
Others of the agency’s bets embrace Vic.ai, a startup that’s automating accounting processes and simply closed a $52 million Sequence C spherical in December; Homebase, a platform for small to mid-size companies that helps with scheduling, payroll, money advances and HR stuff and has raised roughly $100 million from buyers thus far; and SVT Robotics, whose software program organizes robots in warehouses and factories (it closed on $25 million in Sequence A funding in late 2021).
Lee additionally mentioned that Cowboy prefers to spend money on “pre-product” startups (about 70% of its first checks fall into this class) and that, as a result of from the outset it has cultivated a various neighborhood of founders, roughly half of its portfolio corporations had been both based or cofounded by a lady and roughly one-third of them have been based or cofounded by an individual of shade. Whereas Cowboy could be very a lot centered on the underside line, says Lee, it additionally goals to “have a optimistic affect on the neighborhood round us. We’re not a social affect fund, however we get off the bed day by day a bit bit excited to show you could be nice at this job and likewise be a considerate human being on the identical time.”
Certainly, the three companions mentioned the concept is to maintain doing what it’s doing, with the added twist of working a chance fund to again its breakout winners. Although LPs have mentioned they’re much less and fewer captivated with such automobiles — it complicates their very own portfolio building when early-stage companies additionally function later-stage swimming pools of capital — Williams mentioned Cowboy’s buyers didn’t blink on the thought. It was time, she recommended.
“We’ve been writing follow-on checks to numerous our corporations simply both by way of [special purpose vehicles] or by way of our current funds, however not essentially within the test dimension that we’d have needed and even [given the room] our founders had been giving us,” she mentioned final week. “As a substitute of leaving capital on the desk of doing SPVs, this offers us the chance to pursue precisely the identical technique however double down on our winners, and our LPs actually see this as an extension of that technique.”