Cowboy Ventures Five Year Update
Aileen Lee The Cowboy Team – We Think Different
I had a vision to be a small but leveraged team that ‘punches above our weight’ in helping the companies with which we work. Joanne joined our investment team after wowing us with her work while still in grad school; we are a small, nimble investment team that hopes to provide provide best-in-class value for our portfolio companies. To bring even more expertise to startups we also leverage a small team of world-class operating partners (called ‘ninjas’ on our website) who are startup savvy and advise based on their experience scaling successful tech companies like Facebook, Netflix and Intel. Two years ago we added a talent partner, Michelle who works on-site at portfolio companies to help build their teams (think we were the first seed fund to offer
this). One of the most common needs for seed-stage companies is with adding the right next people, and building a super effective recruiting culture. This is what Michelle does – help with organizational plans, to prioritize hires, and recruit awesome and diverse team members, while being on-call for HR and recruiting-related questions for our whole portfolio. The Cowboy Family: 55 companies, $4.1Bn in value, 12 liquidity events
Since founding we’ve invested in 55 amazing companies. Some stats on what kinds of companies we’ve invested in and how things are going: - 80% of our first investments have been in seed stage companies, usually raising rounds of $3m or less. The other 20% include initial investments in series A companies (like LendingHome, Crunchbase, Brava and Philz Coffee), and even a series B (not yet announced)
- Our active portfolio companies are on average 3.2 years
old
- 65% of seed companies had a working prototype when we invested; 35% had thoughtful plans, but had not yet build a working product
- 42% of the companies we’ve backed sell to enterprises; 58% are consumer-oriented
- 20% of our portfolio companies are still seed stage. Their average seed raise has been $2m
- 64% of our portfolio companies have raised a series A; their average series A has been $8m
- 29% of our portfolio companies have raised a series B; their average series B raise has been $19m
- 9% of our portfolio companies have raised a series C or D
- None of our portfolio companies are profitable yet. A number plan to achieve profitability in 2017; and
even more plan to be profitable in 2018
- Cowboy-backed consumer companies raised $12m thru series A; as have enterprise-oriented companies (the ‘capital efficiency gap’ between consumer and enterprise companies in our 2013 analysis may have closed)
- Dollar Shave Club was our first investment from Cowboy Ventures I, hopefully a harbinger of
more good things to come – thank you team DSC!
- In addition to DSC, 20% of our portfolio companies have been acquired by companies like Google, SolarWinds, OneMedical and AngelList
- Just 2 of our 55 portfolio companies have decided to wind things down, likely a lower than average ratio for a venture fund. Might mean we should be making more risky investments; or that our portfolio companies have been uncommonly good at raising follow-on rounds; or it’s too early to tell and this stat doesn’t mean anything
- 2 of our active portfolio companies have successfully pivoted, changing their mission to pursue a different product or customer since funding
Founding team backgrounds - 82% of our portfolio companies have co-founders; 2.3 co-founders on average
- Of companies with co-founders, 67% had previous history together via work or school
- 60% companies had a technical founder on board at founding; 67% of enterprise oriented companies and 56% of consumer oriented companies
- 33% of Cowboy-backed companies have a woman co-founder
- Founders were 34 years old on average at founding (ranging from 19 to
62!)
- 75% of companies have at least one founder who had previously started a company of some sort
- 83% of companies have at least one founder who worked previously at a tech company
- 17% of companies have at least one founder who dropped out of college
- About
half of our companies have at least one founder who is an immigrant
In January 2009 the three founders of a little-known website called Airbedandbreakfast.com decided at the last minute to attend the inauguration of Barack Obama. Brian Chesky, Joe Gebbia, and Nathan Blecharczyk were all in their mid-20s and had no tickets to the festivities, or winter clothes, or even a firm grasp of the week’s schedule. But they saw an opportunity. Their online home-sharing company had limped along for more than a year with little to show for it. Now the eyes of the world would be on the nation’s capital, and they wanted to take advantage.
They found a cheap crash pad in D.C., an apartment in a drafty three-floor house near Howard University that, like so many other homes during that desperate time, was in foreclosure. The rooms were unfurnished save for a pullout sofa, which the three founders gave to their friend and adviser, Michael Seibel, who ran the streaming-video site Justin.tv. At night they crowded onto the hardwood floor on inflatable beds.
Their host was a tenant waiting for eviction. He lived in the basement apartment and had used the AirBed & Breakfast website to rent out the empty first floor and, to three other guests, his own bedroom, living room, and walk-in closet. Sensing a promotional opportunity, Chesky e-mailed the staff of Good Morning America about the closet, and a producer included it in a roundup of unusual accommodations for the inauguration. By day the founders and Seibel passed out AirBed & Breakfast fliers at the Dupont Circle Metro station. “Rent your room! Rent your room!” they cried to the bundled-up commuters, who mostly ignored them. At night they met
other AirBed & Breakfast hosts in the city, talked their way into inaugural parties, and answered multiple e-mails from a disgruntled customer—the guest in the basement bedroom. The woman had driven her Volkswagen bus from Arizona to D.C. with her support dog, a Chihuahua, and she wasn’t keen on the crowded accommodations. In a barrage of complaints, she said she was certain she smelled marijuana, that the juice she’d left in the fridge had been taken, and that the house didn’t comply with the Americans with Disabilities Act. At one point she threatened to call the police. Chesky, Gebbia, and Blecharczyk sat just a few feet above her head, typing out apologetic replies. On the day of the inauguration, they awoke at 3 a.m. to claim a good viewing spot on the National Mall. They walked 2 miles to get there, buying hats and face masks at a kiosk along the way. By 4 a.m. they’d found a space on the green in the area open to the general public, a few football fields away from the presidential podium. [ Bloomberg ]
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