Cowboy Ventures, the now 10-year-old Bay Area-based early-stage focused fund founded by celebrity investor Aileen Lee, has closed two new funds with a combined capital commitment of $260 million. The outfit raised $140 million in commitments for its fourth lead fund and another $120 million for its first opportunity-type fund (its Mustang Fund).
The amount is more than all the capital the outfit has raised from its previous funds, which were $40 million, $60 million and $95 million, respectively. Also over the years, the team has grown from a one-person company to a suite of investor teams, including fintech Jill Williams, who Lee recruited from Anthemis, and Amanda Robson, who was spun off from Norwest Venture Partners. where she worked with many enterprise software companies, including some focused on AI and robotics. (Longtime Silicon Valley attorney Ted Wang is also closely involved with the foundation as a “board partner” and advises more than a dozen of its portfolio companies.)
It’s easy to see why LP put more capital into Cowboy, even in a market that appears to be actively shrinking amid broader market turmoil.
First and foremost, these are numbers that look good, especially given the size of the previous funds. Cowboy was one of the early investors in Guild Education, an online education company focused on upskilling executives, for example, which was valued at $4.4 billion when it closed its latest funding round last June. Cowboy is also an early investor in security and compliance automation platform Drata, which was valued at $2 billion in December when it raised $200 million in Series C funding.
In a conversation with Lee, Williams and Robson late last week, Lee noted that Cowboy sees itself as a generalist firm, but that 70% of its latest fund went to startups and 30% to consumer startups, which Cowboy has also enjoyed. good luck with the last one. (Notably, one of the first tests was done on Dollar Shave Club, the men’s grooming company that Unilever bought for $1 billion in 2016.)
Other firm bets include Vic.ai, a startup that automates accounting processes and just closed a $52 million Series C round in December; Homebase, a platform for small and medium-sized businesses that helps with scheduling, payroll, cash advances and human resources, has raised about $100 million from investors to date; and SVT Robotics, whose software orchestrates robots in warehouses and factories ($25 million Series A funding closed in late 2021).
Lee also said that Cowboy prefers to invest in pre-product startups (about 70% of its first checks fall into this category), and because it has nurtured a diverse community of founders since its inception, about half of its portfolio companies. they were founded or co-founded by a woman, and about one-third were founded or co-founded by a person of color.
While Cowboy is very focused on the bottom line, Lee says, it also aims to “positively impact the community around us. We’re not a social impact foundation, but we get out of bed every day a little excited to prove that you can be great at this job and at the same time also be a thinking person.
Indeed, the three partners said the idea is to continue doing what Cowboy has done all along, in addition to using the opportunity pool to back breakout winners. While LPs have said there is less and less enthusiasm for such vehicles — which complicates building their own portfolios when early-stage companies also manage later-stage equity funds — Williams said Cowboy investors didn’t blink at the idea. It’s about time, she suggested.
“We have written additional checks for many of our companies [special purpose vehicles] or using our existing funds, but not always in the size of the check we would have liked or even [given the room] our founders gave us,” she said last week. “Rather than leaving capital on the table to form an SPV, it gives us the opportunity to execute the exact same strategy but double down on our winners, and our LP really sees this as an extension of that strategy.”
Robson also indicated that the team is excited to have new capital to put to work after a two-year hiatus. “We’ve seen a lot of incremental ideas, and that was especially true in the second half of last year. But budgets are limited and the bar is higher for the value you must provide [your customers]she said, “we think we’re going to see a lot better ideas this year as the year goes on and the dust settles on what is the new environmental normal.”