Cowboy projectsThe now 10-year-old, Bay Area-based, seed-stage-focused fund founded by celebrity investor Eileen Lee, has closed on two new funds totaling $260 million in capital commitments. The group has secured commitments of $140 million for its fourth flagship fund and another $120 million for its first opportunity-type fund (the “Mustang Fund”).
The amount is greater than the total capital raised by the group across 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-man company to a body with an investing team, including fintech specialist Jill Williams, who Lee recruited from Anthemis, and Amanda Robson, pulled from Norwest Venture Partners, where she worked with several of enterprise software companies, including some that focus on artificial intelligence and robotics. (Longtime Silicon Valley attorney Ted Wang is also closely associated with the fund as a “partner on the board” and advises more than a dozen companies from his portfolio.)
It’s easy to see why LPs would allocate 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 pretty good, especially given how much money it’s had in the past. Cowboy was an early investor in Guild Education, for example, an online education company focused on upskilling frontline employees, and has been recognized in $4.4 billion When it closed its last funding round in June last year. Cowboy is also an anchor investor in security and compliance automation platform Drata, which is set to $2 billion Valuation in December when it raised $200 million in Series C financing.
In a conversation with Lee, Williams, and Robson late last week, Lee noted that Cowboy considers itself a public company, but that 70% of its recent fund has been funneled into startups and 30% into consumer startups, since Cowboy has also enjoyed success with the latter. (In particular, one of the first checks went to the Dollar Shave Club, the men’s grooming company that Unilever acquired in 2016 for $1 billion.)
Another bet for the company is Vic.ai, a startup that automates accounting processes and has just closed its $52 million Round C in December; Homebase, a platform for small and medium-sized businesses that helps with scheduling, payroll, cash advances, and HR matters, has increased approx. $100 million of investors so far; and SVT Robotics, whose program regulates robots in warehouses and factories (it has been closed $25 million in Series A funding in late 2021).
Lee also said that Cowboy prefers investing in “pre-product” startups (about 70% of first checks fall into this category) and that from the start it has cultivated a diverse community of founders, nearly half of its portfolio companies being either founded by a woman or I co-founded it, and about a third of them were founded or co-founded by a person of color.
While Cowboy puts a lot of emphasis 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 prove you can be awesome at this job.” And also be a thoughtful human being at the same time.”
In fact, the three partners said the idea was to continue doing what Cowboy’s been doing all along, with the added twist of running an opportunity fund to support outstanding winners. Although LPs have said they’re less enthusiastic about such compounds — it complicates building their own portfolio when early-stage companies also run later-stage capital pools — Williams said Cowboy investors didn’t blink at the idea. I suggested it was time.
“We’ve been writing follow-up scans to a lot of our companies either through [special purpose vehicles] Or with our existing funds, but not necessarily in the size of the check we would have wanted or even [given the room] Our founders have been giving us,” she said last week. “Instead of leaving capital on the table doing special purpose missions, this gives us the opportunity to pursue exactly the same strategy but with a multiplication of our winners, and our marketing partners really see this as an extension of that strategy.”
Meanwhile, Robson noted, the team is excited to have fresh capital to operate after two years of churn. We saw a lot of incremental ideas, and that was especially true in the second half of last year. But with limited budgets and the bar is higher in terms of the value you have to deliver [your customers]She said, “We think we’ll see much better ideas as this year goes on and the dust settles on the new normal for the environment.”