In conversation with Lee, Williams and Robson late last week, Lee noted that Cowboy thinks of itself as a generalist firm, but that 70% of its most recent fund was funneled into enterprise startups and 30% into consumer startups, given Cowboy has also enjoyed success with the latter. (Most notably, one of its first checks went to Dollar Shave Club, the men’s grooming company acquired by Unilever in 2016 for a reported $1 billion.)
Others of the firm’s bets include Vic.ai, a startup that’s automating accounting processes and just closed a $52 million Series C round in December; Homebase, a platform for small to mid-size businesses that helps with scheduling, payroll, cash advances and HR stuff and has raised roughly $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 its first checks fall into this category) and that, because from the outset it has cultivated a diverse community of founders, roughly half of its portfolio companies have either been founded or co-founded by a woman and roughly one-third of them have been founded or co-founded by a person of color.
While Cowboy is very much focused on the bottom line, says Lee, it further 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 bit excited to prove that you can be great at this job and also be a thoughtful human being at the same time.”
Indeed, the three partners said the idea is to keep doing what Cowboy has been doing all along, with the added twist of operating an opportunity fund to back its breakout winners. Though LPs have said they’re less and less enthusiastic about such vehicles — it complicates their own portfolio construction when early-stage firms also operate later-stage pools of capital — Williams said Cowboy’s investors didn’t blink at the idea. It was time, she suggested.
“We’ve been writing follow-on checks to a lot of our companies just either through [special purpose vehicles] or through our existing funds, but not necessarily in the check size that we would have wanted or even [given the room] our founders were giving us,” she said last week. “Instead of leaving capital on the table of doing SPVs, this gives us the opportunity to pursue exactly the same strategy but double down on our winners, and our LPs really see this as an extension of that strategy.”
Robson meanwhile suggested that the team is excited to have fresh capital to put to work after two years of froth. “We have seen a lot of incremental ideas, and this was especially true in the second half of last year. But with budgets constrained and the bar higher regarding the value you have to provide [your customers],” she said, “we think we’re going to see far better ideation as this year goes on and the dust settles on what the new normal for the environment is.”