cowboy adventures, the Bay Area-based early-stage focused fund, now 10 years old and founded by renowned investor Aileen Lee, has closed on two new funds totaling $260 million in capital commitments. The team secured $140 million in commitments for its fourth flagship fund and another $120 million for its first opportunity-type fund (its “Mustang Fund”).
The amount is more than all the capital the team has raised in its previous funds, which were $40 million, $60 million and $95 million in size, respectively. Furthermore, the team has grown over the years from a one-man company to a team with an investment team, including fintech specialist Jill Williams, whom Lee recruited from Anthemis, and Amanda Robson, who was retired from Norwest Venture Partners, where she worked with numerous enterprise software companies, including some focused on AI and robotics. (Ted Wang, a longtime Silicon Valley attorney, is also closely associated with the fund as a “board partner,” advising more than a dozen of his portfolio companies.)
It’s easy to appreciate why LPs committed more capital to Cowboy, even in a market that appears to be actively shrinking given the general market turmoil. First and foremost are his numbers, which look good, especially given the size of his previous bankrolls. Cowboy was an early investor 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 an initial investor in security and compliance automation platform Drata, which has been 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 considers itself a generalist company, but 70% of its most recent funding has gone into startups and 30% into consumer startups, as Cowboy has also enjoyed success with the latter. (Notably, one of his first checks was to Dollar Shave Club, the men’s grooming company acquired by Unilever in 2016 for $1 billion.)
Other of the firm’s bets include Vic.ai, a startup that is automating accounting processes and has 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 about $100 million of investors to date; and SVT Robotics, whose software organizes robots in warehouses and factories (closed $25 million in Series A financing at the end of 2021).
Lee also said that Cowboy prefers to invest in startups “before product” (about 70% of his first checks are in this category) and that because he has cultivated a diverse community of founders from the start, about half of its portfolio companies were founded or co-founded by a woman and approximately one-third of them have been 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 a little excited to show that you can be great at this job and also be a thoughtful human being at the same time.”
In fact, all three partners said the idea is to keep doing what they’re doing, with the added twist of operating an opportunity fund to back their winners. Although LPs have said they’re less and less enthusiastic about such vehicles (it complicates building your own portfolio when early-stage companies also operate later-stage equity pools), Williams said Cowboy investors haven’t blinked at the idea. . About time, he suggested.
“We have been issuing follow-up checks to many of our companies either through [special purpose vehicles] or through our existing funds, but not necessarily in the size of the check we would have wanted or even [given the room] our founders were giving us,” he said last week. “Instead of leaving capital on the table to do SPVs, this gives us the opportunity to follow the exact same strategy but double down on our earners, and our LPs really see this as an extension of that strategy.”