Cowboy Ventures, the Bay Area-based seed-stage focused fund founded by celebrity investor Aileen Lee, has closed two new funds totaling $260 million in capital commitments. The outfit raised $140 million in commitments for its fourth flagship fund and an additional $120 million for its first opportunity-type fund (its “Mustang Fund”).
The amount is greater than all the capital the company has raised from its previous funds, which stood at $40 million, $60 million and $95 million, respectively. Again, the team has grown over the years from a one-man business to one with a team of investors, including fintech specialist Jill Williams, whom Lee recruited from Anthemis, and Amanda Robson, who has retired from Norwest Venture Partners, where she worked with numerous enterprise software companies, including some focused on AI and robotics. (Longtime Silicon Valley attorney Ted Wang is also closely associated with the fund as a “board partner” and advises more than a dozen companies in its portfolio.)
It’s easy to see why LPs have committed more capital to Cowboy, even in a market that appears to be actively shrinking given the broader market turmoil.
First and foremost are its numbers, which look good, especially given the size of its previous funds. Cowboy was an early investor in Guild Education, for example, an online education company that focuses on developing frontline employees, and was valued at $4.4 billion when it closed its last funding round in June of last year. Cowboy is also a seed investor in security and compliance automation platform Drata, which was awarded a $2 billion valuation in December when it raised $200 million in funding. C-series.
Picture credits: Cowboy Ventures
In a conversation with Lee, Williams and Robson late last week, Lee noted that Cowboy sees itself as a generalist company, but that 70% of its most recent fund went to corporate startups. and 30% to mainstream startups, given that Cowboy has also enjoyed success with the latter. (Most notably, one of his first checks went to Dollar Shave Club, the men’s grooming company Unilever acquired in 2016 for $1 billion.)
Other bets from the company include Vic.ai, a startup that automates accounting processes that 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 and has raised approximately $100 million from investors to date; and SVT Robotics, whose software organizes robots in warehouses and factories (it closed $25 million in Series A funding in late 2021).
Lee also said that Cowboy prefers to invest in “pre-product” startups (about 70% of his early checks fall into this category) and that because he cultivated a diverse community of founders from the start, about half of the companies in its portfolio were founded or co-founded by a woman and approximately 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 “have a positive impact on the community around us.” We’re not a social impact fund, but we wake up a little excited every day to prove that you can be great at this job and be a caring human being at the same time. »
Indeed, the three partners said the idea was to continue doing what Cowboy has always done, with the added bonus of tapping into an opportunity fund to support its big winners. Although LPs have said they are less and less enthusiastic about these vehicles – it makes it difficult to build their own portfolio when start-ups also tap into later-stage pools of capital – Williams said Cowboy investors had no hesitation in the idea. It was time, she suggested.
“We have written tracking checks for many of our businesses, either through [special purpose vehicles] or through our existing funds, but not necessarily in the check size we would have liked or even [given the room] our founders were giving to us,” she said last week. “Instead of leaving capital on the table to make SPVs, it gives us the opportunity to pursue the exact same strategy but double down on our winners, and our LPs really see that as an extension of that strategy.”
Robson also suggested the team is thrilled to have new capital to put to work after two years of moss. “We’ve seen a lot of additional ideas, and that was especially true in the second half of last year. But with constrained budgets and the higher bar for the value you need to deliver [your customers]”, she said, “we think we’re going to see a lot better ideation as this year goes on and the dust settles on what the new normal for the environment is.