Cowboy Ventures, the Bay Area-based seed-stage focused fund founded by celebrity investor Aileen Lee, closed on 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 has been valued at $4.4 billion when it closed its last round of funding in June last year. Cowboy is also a seed investor in security and compliance automation platform Drata, assigned a $2 billion valuation 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 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 for the company 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 and has raised around $100 million investors to date; and SVT Robotics, whose software organizes robots in warehouses and factories (it closed the $25 million Series A financing at the end of 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 keep doing what they were doing, with the added twist 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.”