Cowboy Ventures, the now-10-year-old Bay Area-based seed-stage focused fund founded by renowned investor Elaine Lee, has closed on two new funds totaling $260 million in capital commitments. The outfit received $140 million in commitments for its fourth flagship fund and $120 million for its first opportunity-type fund (its “Mustang Fund”).
This amount is more than all the capital the organization has raised in its previous funds, which were $40 million, $60 million and $95 million, respectively. Then again, the team has grown over the years from a one-person firm to a conglomerate with an investor team, including fintech expert Jill Williams, whom Lee recruited from Anthemis, and Amanda Robson, who was spun off from Norwest Venture Partners, where she ran numerous enterprise software companies. worked with, some focusing on AI and robotics. (Longtime Silicon Valley attorney Ted Wang is also closely involved with the fund as a “board partner” and advises more than a dozen of its portfolio companies.)
It’s easy to appreciate why LPs gave cowboys more capital, even in a market that was actively shrinking due to widespread market volatility.
First and foremost are its numbers, which look good, especially given the size of its previous funding. Cowboy was one of the first investors in Guild Education, for example, an online education company that focuses on upskilling frontline employees, and was valued at $4.4 billion when it closed its most recent funding round in June of last year. Cowboy is also a seed investor in security and compliance automation platform Drata, which was assigned a $2 billion valuation in December when it raised $200 million in Series C funding.
In a conversation with Lee, Williams and Robson last week, Lee noted that Cowboy considers itself a generalist firm, but that 70% of its most recent funding was funneled into enterprise startups and 30% into consumer startups, as Cowboy has also enjoyed. Success with the latter. (Most notably, his first check dollar went to Shave Club, which was acquired by men’s grooming company Unilever for $1 billion in 2016.)
The firm’s other stakes include Vic.ai, a startup that automates accounting processes and closed a $52 million Series C round in December; Homebase, a platform for small to mid-sized businesses that helps with scheduling, payroll, cash advances and HR stuff, has raised around $100 million from investors so far; and SVT Robotics, whose software orchestrates 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 its first checks fall into this category) and that, because it has cultivated a diverse community of founders since the beginning, about half of its portfolio companies are either were founded or co-founded by a woman and nearly one-third of them are 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 get out of bed every day to prove that you can do this.” Can be great at a job and at the same time be a thoughtful human being.
Indeed, all three partners said the idea is to continue doing what Cowboy is doing with the added twist of running an opportunity fund to back its breakout winners. Although LPs have said they are less and less enthusiastic about such vehicles — it complicates building their own portfolios when early-stage companies also manage later-stage pools of capital — Williams said Cowboy’s investors don’t bat an eye at the idea. . It was time, she suggested.
“We are writing follow-on checks to many of our companies [special purpose vehicles] Or through our existing funds, but not necessarily in the size of the check we want or even [given the room] Our founders were giving us,” she said last week. “Instead of leaving capital on the table to do SPVs, this gives us the opportunity to pursue exactly the same strategy but double the cut on our winners, and our LPs really see this as an extension of that strategy. sees.”
Robson, meanwhile, suggested the team was excited to have new capital to work with after two years. “We’ve seen a lot of growth ideas, and this was especially true in the second half of last year. But with budget constraints and the value you have to provide, the bar is high [your customers]”We think we’re going to see better thinking as the year goes on and what the new normal is for the dust environment,” she said.