Monthly Archives: January 2017

An Update from Cowboy Ventures and Announcing Our New Team Member, Ted Wang

Posted Jan 24, 2017 by Aileen Lee

Happy new year!  The beginning of the year is usually a good time to reflect – on how things have been going and to make fresh plans for what’s ahead. It’s also a great time for us to announce a new partner is joining our team, Ted Wang.  Please join us in welcoming Ted to the Cowboy Posse!

Reflections since starting almost five years ago
This summer will mark five years since getting into business with our first fund, Cowboy Ventures Fund I. When starting out in 2012 I had a belief there was an opportunity to build a new kind of firm in this emerging category called seed. I hoped to build a team entrepreneurs and co-investors loved to work with because we gave great guidance, were super-connected, helpful beyond expectations, personal, brought an active community of entrepreneurs and advisors, and a different perspective and way of working with entrepreneurs. So I leapt from my perch as a senior partner at KPCB to start Cowboy, aiming to work with the best seed-stage startup founders and the next generation of most valuable, innovative tech companies.

Fundraising in 2012
It’s kind of fun to remember some of the questions asked while fundraising five years ago. There were questions about seed as a category – whether it was a fad, or if seed funds would be put out of business by traditional VC funds. Whether Angellist was going to make seed and venture funds irrelevant. Many questions about how we would differentiate ourselves and how we’d get ‘deal flow’, still relevant today.

I also got some questions about whether being a woman would hurt our chances of succeeding. “Aren’t venture and startups boys clubs, how will you get deal flow?”  I’m grateful for the visionary institutions and individuals who took the leap to back our startup firm Cowboy Ventures. I’m also grateful they and some great new institutions joined to invest in Cowboy Ventures II, a $60m fund we started investing in 2015.

Bringing Data to Private Company Investing
After getting into business, I worked on an analysis of the past decade’s most successful tech companies in order to inform our investment strategy. This became a many-month data collection process that turned out many insights, some of which bucked conventional wisdom at the time – such as how many outlier companies were ‘born’ per year, a longer-than-expected time to liquidity for startups, an older-than-expected average age at founding for successful startup founders, the importance of cofounders with history together, the role prior experience had, the lack of gender diversity among founders, and more. The curiosity turned into the creation of a set of billion-dollar companies to study, and then into a blogpost to share the learning, called “Welcome to the Unicorn Club, where we coined the term “unicorn”.  

Needless to say it was a big surprise to see the article was shared over 10,000 times in the first month. And there’s now a Fortune Unicorn list, a Crunchbase Unicorn Leaderboard, a CB Insights Complete List of Unicorns and a WSJ List of Billion Dollar Companies, and other related analyses. We did an update in 2015 to our original analysis, which showed massive growth in what we call “paper unicorns”, changes in the capital efficiency of startups, and anticipating potential “unicorpses” ahead.  We look forward to updating our analysis this summer.

While the unicorn term has become grating to some – being part of a recognized outlier company is a source of pride for founders, team members and investors in an intensely risky field. It’s also what the traditional VC startup ecosystem is built on. I’m happy if we helped encourage deeper analysis and understanding of what it takes to build standout companies. We have a lot more to learn from the unstudied data in our industry.

Changes in the Plan Since Founding
It’s fun to remember Cowboy Ventures was a placeholder name in 2012. Names and words are important, and I thought I’d come up with a more “serious” name after closing the fund. After buying many urls, we realized Cowboy represented exactly what we were looking for – a spirit of the west, independent thinking, resilience, substance without formality, and being willing to brave the frontier with few resources and a small team. Cowboy Ventures also had a sense of humor as a name; and it evokes family, as it is a name conjured by our daughters and is the name of our son.

The scope of Cowboy’s investments has also broadened since getting started. We quickly realized we could be helpful to enterprise companies in addition to consumer cos; so since we’ve helped lead investments in SaaS companies (like Abstract, Homebase and Textio), edtech (Guild Education), govtech (Seneca Systems), security (Area 1) and infrastructure technology (Librato and Lightstep), as well as consumer oriented companies like commerce (Dollar Shave Club, Massdrop, Memebox and True & Co), IoT (August) and content/audience-driven business models (Hooked and AfterSchool).

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

Looking ahead:  A new partner joining our rodeo, Ted Wang
I’ve been the sole general partner at Cowboy Ventures for the past five years and am proud to have gotten us into business, set a course, come up with fun non-traditional logos and backed the exceptional people in the Cowboy family. But we know teams win, and having different people around the table drives better outcomes, especially in investing. And we want to continually improve in being exceptionally helpful to entrepreneurs.

So I’m thrilled to announce Ted is joining our posse as an investment partner. Ted brings unmatched experience, guidance, relationships, new ideas and energy to our teams. Ted and I also share a strong service orientation toward founders, a love for the potential of Cowboy Ventures, New Jersey grit and a friendship that spans over a decade.

A few words about Ted’s relevant experience for founders. He ran and grew his own legal startup, so he can relate to some of the struggle startup founders go through. Starting with only a small practice at Fenwick & West, he became the leading lawyer for venture-backed consumer and enterprise tech startups over the past 10 years. By having a nose for tech trends, great instincts about people, hustling, giving outstanding advice, being respected and recommended by many great founders and investors, and being a no BS, fun to work with human, he was chosen as outside counsel (most often at company founding stage) by many of the best founders across the country. This includes teams at Facebook, Twitter, Square, Dropbox, Gusto, Jet, Quip, Sonos, Zuora, Alt School, Appirio and 200+ more clients. Just imagine having the chance to be advised by an investor who has sat for years at board tables with so many of the most valuable tech companies, helped with thousands of financings and M&A transactions, and seen hundreds of companies have to turn out the lights in the past decade. We think he is going to be awesomely helpful to startups.

Ted has also done cool things for the entrepreneurial community like author the widely used open source Series Seed documents. I used to joke a smart venture investment strategy would be to build a Ted Wang shadow portfolio – it would generate better returns than most venture funds.  

Beyond his business success, Ted is also a fantastic friend, family member, adventurer and citizen. His wife Michele is one of my favorite people in the world, as are their two children Kate & Jake. They have amazing enthusiasm for life experiences, like moving to Argentina two years ago to experience a year abroad. Ted also has passions outside of work like seeing live music, following our local sports teams, and making Silicon Valley more accessible and livable – he was one of the drivers behind the recently approved Measure A that created a $950m bond to build more affordable housing in Santa Clara County.

On behalf of the Cowboy Ventures community, I’m excited to welcome Ted to our team. His energy, ideas, experiences and relationships will make us even better, and will make work more fun for us.  He can be reached at and @twang on Twitter.

What’s Ahead for Cowboy Ventures?
We’re as excited as ever about the power of entrepreneurial teams, and about how software and hardware will continue to transform industries and build new, durable, super valuable companies to meet customer needs.

We’ve just seen the tip of the iceberg in terms of the number of new, valuable technology companies that will be built and scale because of the new technology utilities available to developers and entrepreneurs. We’re particularly interested in how voice will become an important new input; how many more inefficient, manual, paper-based and repetitive processes will be improved by the power of modern software with better, mobile-friendly user experiences; innovative new tech-driven brands building products customers love; and “learning loop software” or “smarter software” – software that machine-learns and uses AI in real time to personalize the user experience, making it more convenient, effective and delightful for customers.

And what we will continue to be most fired up about is the people. We love meeting every week with teams who have an innovative technical approach or new insight to a large market; who are voracious learners; who hustle and figure out how to do more with less; who are oriented toward building products customers love; who want to build inclusive, diverse, modern cultures; and who want to improve the world. We’re grateful to the awesome group of companies in the Cowboy portfolio who do this every day. And if you are starting a tech company and this speaks to you, we hope you will connect with us.

It’s been amazing almost five years.  We are proud to be making progress on our mission, thanks to a fantastic community of companies, advisors, investors and friends of Cowboy Ventures. Thanks for reading a bit about us and we wish you a healthy, happy, productive and peace-filled year ahead.

I’m Joining the Cowboy Posse

Posted Jan 24, 2017 by Ted Wang

stocksy_txp412bc114vnk100_medium_290067After nearly 20 years working with startups in Silicon Valley as counsel, I’m excited to announce I’m joining Cowboy Ventures as an investing partner.

For the past decade at Fenwick & West, I have loved working with a broad group of clients from incorporation to being a public company, and everything in between. I’ve realized that it’s time for a new challenge and so I’ve decided to use my skills and experience to work with startups more directly as an investor and business advisor. At Cowboy, I will have a chance to do that with a friend I’ve known for over a decade, and become part of a firm about which I am super excited.

How did I get here?

I  began my legal career at the wonderful firm Gunderson Dettmer almost 20 years ago.  After a few great years there, I left to start a solo law practice so I could be closer to the action of my startup clients. My first “office” was a single room in a dingy second story office building next to Gordon Biersch. I started with two clients. These humble beginnings gave me a great appreciation for the excitement and optimism of starting something new.  I also felt firsthand the intermittent terror entrepreneurs can feel during this stage and the resulting sense of urgency.

It sounds absurd now, but the fundamental bet that I made at this point in my career was that the Internet would be big.  As the Internet sector rebounded from the crash, my law practice grew like a weed.  In a few short years, my clients’ needs had outgrown the capabilities of my small firm and so I joined Fenwick & West.  Fenwick was the ideal place for me.  It was an excellent firm with a great group of experienced, highly skilled lawyers and I was a young, scrappy and hungry lawyer with something to prove.  I went to every conference, had 200 business lunches in one year alone and stayed up all hours of the night working on my clients’ deals.  With a little bit of pluck and a little bit of luck my practice flourished.

During my decade at Fenwick, I had the good fortune to work with many of the best entrepreneurs, investors and advisors of the era.  I helped Evan Williams to shut down a struggling podcasting company called Odeo and spin out this funny little idea called Twitter into a separate company.  I negotiated the seed financing term sheet for Dropbox with Drew and Arash in the Palace Hotel during the Web 2.0 conference. I was at a Facebook board meeting when I first heard Mark Zuckerberg articulate his law of information sharing.  I watched Jack Dorsey grow as a leader at Square and saw Marc Lore make huge bets that ultimately paid off at  Watching these fantastic entrepreneurs work was a terrific education for me.

Of course, the startup lifecycle is not all lollipops and rainbows.  I’ve also had countless conversations with founders who have had to turn out the lights on their dream and I know how heartbreaking it can be.  I’ve seen pivots, double pivots and in one case, a complete 360 degree turn. I’ve been part of victory being snatched from the jaws of defeat and of promising deals that fell apart at the last second.  Some of the people whom I respect the most are those who handled a shutdown or layoff the right way, treating people with dignity and respect and putting the interests of others before their own.  

With all of the situations I encountered, good and bad, I learned a lot about the startup world.  There was the time when we sold a company at just the right moment and the one when we failed to sell when we should have.  I’ve seen new team members who raised a company’s game and others who drove a company into the ground like a dart.  I’ve watched entrepreneurs who have ignored all distractions while staying laser focused on critical matters and those who drowned trying to chase down every seemingly golden opportunity. No matter what is happening at a startup, I’ve seen that “movie” before and for years I’ve shared these learnings with my clients.

Being outside counsel, however, comes with some limitations, not the least of which is the billable clock looming over every conversation.  As counsel even though I was on the journey with founders from the beginning, and I felt respected and trusted (and, in the best cases, loved) I also often felt I had to hold back given my role.  For years I’ve been giving people advice as to how to navigate the perilous waters of the startup world.  It’s time to jump into the boat.   I am still young, scrappy and hungry and am excited to use my experience to help entrepreneurs thrive and to prove myself as one of the most valuable early stage investors.

Why Cowboy Ventures / Cowboy Ventures is Special

I’m fortunate to have known Cowboy’s founder, Aileen Lee  for many years and she and her husband Jason are among my closest friends and favorite people in the world. She has been a trusted confidant on both business and personal matters for me and my wife. She and her family even traveled all the way to Argentina to visit us when we were there for a year abroad.

My wife and I were at the the initial kick off “thank you” dinner for the firm and we’ve been enthusiastically watching Aileen build Cowboy ever since.  What she and the team have created is an outstanding firm known for bringing valuable, hands-on advice and connections to its portfolio companies.  The Cowboy team stands out for the durable, personal relationships it creates with its founders.  Being a founder can be a hard and lonely road, and Cowboy has thrived by fostering authentic communications with its founders, and not just when they are  “killing it.”  Cowboy is also a more diverse and inclusive group than others.  As the token man at the firm, I’m proud to be joining a group that has advocated for and understands the benefits of diversity and inclusion. In short, Aileen and her team have built one of the most respected new ‘brands’ in venture and I feel very lucky to be a part of it.

But there’s more.

At Cowboy Ventures, Aileen and her team work incredibly hard, and they have also managed to succeed while creating a tribe of people who excel at and love the work they do. Hard work and fun need not be mutually exclusive.  Watch the Golden State Warriors play basketball or listen to Pearl Jam make music and it’s evident that people can perform at the highest level and truly enjoy doing so.  Cowboy exemplifies this spirit and it’s one of the things that drew me to the firm.   Aileen refers to this attitude as “always happy, never satisfied” and this is spirit that has animated my entire career.   I look forward to working with founders who share these values and want to work hard and have fun with us.

What I’ll be looking for in the coming year

Since I’ve yet to spend one day on the job, I’m not ready to declare a thesis, unless you count “working  with outstanding people” a thesis.  My current thought is to follow the same type of “no duh” thinking that led me to focus on the technology sector 20 years ago and the Internet 10 years after that.  It’s pretty clear that natural language processing and machine learning are radically changing computing and that services based on AI are going to find new and amazing ways to help both consumers and businesses.  In particular I’ve got a feeling that this will really impact accounting and so would like to meet anyone who is working in that area.  I’m also pretty confident that our current TVs and other video consumption devices are going to look like Space Invaders looks today when compared to whatever it is we will be watching a decade from now and so both virtual and augmented reality are of interest.  Finally,  when I started working in the industry, my clients’ products were software programs or consumer facing services.  Now I represent folks who are creating tech enabled primary schools, universities, home healthcare services and concierge medical care facilities.  I am intrigued by these “third wave” companies which use technology as the backbone of delivering superior services to consumers in established industries.

What type of people do I want to back?  As I reflect over my career there are a few commonalities in successful founders I’ve noted:

    • Forceful, but not loud: There’s a notion that great entrepreneurs are rah, rah leaders or slick sales people, but that doesn’t foot with my experience.  Most of the great founders I’ve worked with have been rather subdued sorts.  The amount of volume a person generates has no relation to the amount of determination that person has and this quiet demeanor can often mask a steely determination that is critical for success.
    • Ability to focus: There’s an old trope that startups die of indigestion and not starvation.  The best founders I’ve worked with know how to focus the effort and energies of the team on the key objectives that really matter.  Steven Covey famously said  “the main thing is to keep the main thing the main thing.” The best entrepreneurs are able to ignore the myriad of distractions that arise and focus on the critical projects that make their company successful.
  • Data driven: The best founders are willing to let new information take them in different directions.  I was once discussing a course of action with a well known technology CEO, who was quietly but forcefully disagreeing with my point of view.  I added one fact to the discussion and he did an about face and proceeded as I was suggesting, as if the previous conversation had not happened. To me this is emblematic of the data driven approach.  
  • Learn it alls:  The best founders I’ve worked with are intellectually curious.  They are constantly learning new things, both in work and in their free time and they come to conversations genuinely curious to learn and understand what the other people have to say.  They are probably not going to be extraordinarily patient if that information isn’t delivered promptly and succinctly but if someone is presenting new and useful information, she is going to get that founder’s attention.

Listing these traits in retrospect is obviously a hell of a lot easier than finding people who exhibit them ex ante, but the above list should give folks a good notion of the types of people I’d like to meet.

Thank you!

I would like to thank my many wonderful clients, partners and other team members from Fenwick & West for more than ten amazing years.  It was a heck of a decade and I am privileged to have worked with such an outstanding group of people.  Although I will be focusing my efforts on Cowboy, I will remain a special counsel to the firm and will still be available to help with problems as needed.  I look forward to working with you all in new ways as I ride off into the next chapter.  Giddy Up!

PS: my new contact info will be and i can be found at @twang on Twitter.