Cowboy Ventures Closes Capital For $95 Million Third Fund

Cowboy Ventures has a new fund to work with, joining the ranks of a host of rival venture firms that recently closed fresh capital pools.

Back in 2013, in a post published by TechCrunch, Aileen Lee coined and popularized the now-ubiquitous term “unicorn” to describe the then-rare privately-held tech companies valued at $1 billion or more.

Follow Crunchbase News on Twitter

Lee is the founder and managing partner of Cowboy Ventures, a Palo Alto-based startup investment firm which typically makes its first investments at the seed stage and often follows on through later stages. The firm’s portfolio includes companies like Product Hunt (acquired by AngelList), Brandless (which just raised a supergiant round from SoftBank), and Crunchbase (see important disclosures at the end of this post), among others.

Late Monday afternoon, Cowboy Ventures filed paperwork with the SEC indicating that the firm has raised $93 million out of a targeted $95 million for “Cowboy Ventures Fund III, LLC.” The paperwork indicates that longtime investment partner Ted Wang has joined Cowboy Ventures as a general partner.

According to Crunchbase data, the $95 million fund would be Cowboy Ventures’s largest to date. Cowboy Ventures announced its first fund, some $40 million, in July 2012. Two years later, the firm announced a $55 million second fund. In other words, although we’re still talking about relatively small amounts of capital here, it’s notable that Cowboy Ventures’s third fund is slated to be the same size as its prior two funds combined.

Crunchbase News confirmed this information with Lee on a phone call on Monday evening. She said that little about her firm’s investment strategy has changed as it begins to invest out of Fund III. On Tuesday morning, Cowboy Ventures formally announced the new fund in a post on its website.

Lee says the firm remains largely sector agnostic, instead identifying industries and markets that haven’t seen much VC investment yet. The blog post said Cowboy Ventures is exploring back office technology, “AR for enterprises,” “learning loop software,” and other emerging sectors as targets.

“We want to be the first institutional investment that startups get,” she said.

As for the reasoning behind raising a larger fund, Lee cited micro and macro factors. In part, the additional capital under management will help support a second general partner and expand firm capabilities. But, more importantly, Lee cited the trend of “companies staying private longer” and the higher price of exercising pro rata rights as rounds and valuations continue to grow.

Disclosure: Cowboy is a listed investor in Crunchbase, the parent company of Crunchbase News. No investor in Crunchbase has any say in Crunchbase News’s editorial operations. We sometimes cover investors in our parent company when they come up in the normal course of our reporting. For more on how we handle conflicts of interest, head here.

Illustration: Li-Anne Dias