Canadian Prime Minister Justin Trudeau has announced a new federal investment to build and commercialise the world’s first photonic-based, fault-tolerant quantum computer.
Solar-powered electric vehicle maker Lightyear said it’s halting production on its flagship Lightyear 0, its premium EV with a sticker price of €250,000. Despite only starting production on the vehicle three months ago, Lightyear is restructuring to focus on building a more affordable model, the Lightyear 2 for around €40,000, reports Electrek.
The news comes as many electric vehicle makers push back production and delivery dates due to a range of macroeconomic factors like semiconductor shortages, battery supply issues and rising costs of materials due to inflation. At the same time, with recession fears hanging over consumers like a dark cloud and EV startups struggling to get vehicles off the assembly line, throwing money into an extremely expensive model just doesn’t make good business sense.
The Lightyear 0 was always intended as a technology demonstrator to be produced in limited quantities. In a press release, Lightyear said it has had to overcome “many challenges” in order to make its vehicles a reality. The company didn’t specify what challenges, but said in order to safeguard its vision, the Lightyear 0 needed to die so the Lightyear 2 could thrive.
“We are now redirecting all our energy towards building Lightyear 2 in order to make it available to clients on schedule,” said Lightyear’s CEO and co-founder Lex Hoefsloot in a statement.
Lightyear opened the waitlist for Lightyear 2, a five-seater hatchback with a promised range of 500 miles per charge, earlier this month at CES. The company hasn’t shared many details on the car, but already the Lightyear 2 has over 40,000 reservations from individual buyers and about 20,000 pre-orders from fleet owners like international leasing and car-sharing companies Leaseplan, MyWheels, Arval and Athlon, a company spokesperson told TechCrunch.
The Lightyear 2 is scheduled to start production in mass-market volumes at the end of 2025. It’s not clear if the company intends to push up that production date now that it won’t be building the Lightyear 0, for which it has already pre-sold 150 units. Earlier this month, a Lightyear spokesperson told TechCrunch the first Lightyear 0 has been produced and shown to the company’s first customer. The company said it had been building one car per week since November and expected to ramp up weekly production later this year.
Lightyear did not respond in time to TechCrunch to comment on production date of the 2s or whether it will make good on its 0 sales.
However, Lightyear did say in a press release that it submitted a request to “the court to open suspension of payment proceedings in relation to Atlas Technologies B.V., our operating company responsible for the production of the Lightyear 0.” The company didn’t stipulate to which court it submitted a suspension request, but according to the Netherlands Enterprise Agency, companies can request to have their debts frozen for 18 months, giving them time to reorganize.
Lightyear will likely try to raise more money to stay afloat. The company raised $81 million in September as it prepared to start production on Lightyear 0, but Hoefsloot noted that the company hopes to “conclude some key investments in the coming weeks in order to scale up” the car for a wider audience.
Lightyear stops production on €250,000 solar-powered EV by Rebecca Bellan originally published on TechCrunch
Elon Musk testified Monday that he was not only certain he’d have the backing from Saudi financiers to take Tesla private in 2018, but also that he could have sold enough shares of his rocket company SpaceX to fund a buyout.
Musk defended himself as part of an ongoing lawsuit against the CEO for allegedly defrauding investors by tweeting on August 7, 2018 that he had secured funding to take Tesla private at $420 per share and that “investor support is confirmed.” Tesla’s stock price surged after Musk’s tweets and later dropped when it became clear the buyout wouldn’t happen. Investors say they lost millions as a result of Musk’s tweets.
While Musk does stand to lose billions of dollars in damages if he loses the case, what’s really at stake for the world’s richest man is his reputation for being truthful and for looking after his investors.
In a San Francisco federal court, Musk doubled down on his belief that he had a verbal confirmation from the Saudi Arabian Public Investment Fund (PIF) to take Tesla private. Musk testified that the fund “backpedaled” on its commitment. He also acknowledged that no takeover price had been discussed with representatives of the PIF.
Even without the PIF money, he “felt funding was secured” with SpaceX stock alone. Musk nodded toward his sales of Tesla stock to buy Twitter, and said he would have considered doing the same thing to make the deal to take Tesla private go through.
The plaintiff’s lawyers countered that since Musk’s deposition from last year didn’t include any reference to selling SpaceX stock, today’s inclusion of that point was constructed in hindsight.
Musk’s lawyer, Alex Spiro, also pointed to Musk’s ability to raise “more money than anyone in history,” according to Musk, which would have also backed the executive’s claims that funding was secured.
A jury of nine will decide whether the CEO artificially inflated the company’s share price with his tweets about the buyout, and if so, by how much. U.S. Judge Edward Chen ruled last year that Musk’s post was untruthful and reckless, which might affect the jury’s opinion.
Musk says he tries to do what’s best for investors
Musk and his attorney also argued that he wasn’t trying to defraud investors, but actually wanted to bring some of them along. Tesla’s hardcore base of retail investors — like the plaintiffs in this case — is important to the company. But the SEC doesn’t allow retail investors to invest in private companies.
“So the concerns would be if Musk took this company private, could the person who owns two shares of Tesla and has a low-paying job remain an investor? Because the company’s got a very loyal retail investor fan base of people who buy Tesla’s products and believe in Musk,” Josh White, an assistant professor of finance at Vanderbilt University and former financial economist for the SEC, told TechCrunch.
During the trial on Monday, Musk provided details about certain special purpose vehicles that are available to SpaceX investors — SpaceX being a private company — that Musk supposedly wanted to replicate with his take-private deal with Tesla.
“Musk was trying to say they could invest in a sort of special purpose vehicle which would perhaps allow retail investors to come together in something that looks like a fund, then that fund actually invests in a private Tesla,” said White.
White noted that these types of vehicles aren’t always good for investors because it leaves them with less liquidity.
Regardless, the plaintiff’s lawyers demonstrated through exhibits from Goldman Sachs and other investors that there were limitations on keeping retail investors involved in a private Tesla.
While on the stand, Musk also framed his tweets about an incomplete deal as an attempt to include shareholders in his considerations to take the company private. He said he was concerned the Financial Times knew about the Saudi’s potential investment in Tesla and Tesla’s take-private deal, and would leak the info before Musk himself got the chance to tell shareholders.
“I was worried that shareholders would think that I was trying to exclude them,” Musk said. “And I want it to be clear that I was trying to support them”
“The $420 price was not a joke.”
The U.S. Securities and Exchange Commission also investigated Musk’s tweets, which lead to a combined $40 million settlement from him and Tesla, and a requirement that a Tesla lawyer review Tesla-related tweets in advance, something Musk tried to appeal later.
The SEC alleged that Musk had rounded the buyout offer to $420 per share from $419 as a reference to weed culture, which the agency said Musk’s girlfriend would find funny.
Musk denied this, and said it was a coincidence that $420 is also a reference to Weed Day, which is on April 20.
“It was chosen because it was a 20% premium over the stock price,” said Musk. “The $420 price was not a joke.”
Musk also testified briefly last Friday, telling jurors he didn’t believe his tweets affected Tesla stock.
“Just because I tweet something does not mean people believe it or will act accordingly,” Musk said.
Musk said he could have funded a Tesla buyout with SpaceX shares by Rebecca Bellan originally published on TechCrunch
Electric vehicles accounted for nearly 6% of all new cars sold in the U.S. in 2022, an increase from 3.1% the year before, and that number will continue to grow over the coming years. While it’s still a young industry, the ecosystem surrounding EVs — from EV charging and installation to insurance products and parking — is shaping up to be one that’s disconnected and somewhat complicated.
So say the founders of Bluedot, a banking and rewards platform for EV owners that aims to enhance the after-sales experience. Here’s how it works: Individual owners or fleet managers sign up for Bluedot’s debit card, which they’ll use for all auto-related purchases, but predominantly for EV charging. Bluedot is currently offering customers a flat fee of $0.30 per kilowatt hour of charging with participating EV charging stations, and 20% cash back on charges with nonparticipating charging networks. Customers find stations and pay directly for charges with partner charging companies on Bluedot’s app, saving them the need to download multiple apps.
Bluedot users also get 5% cash back on all automotive expenses, plus another 2% cash back for all other expenses. In addition, the company provides users with rewards in nearby shopping and dining locations. So while waiting for their car to charge, a customer can walk over to the local Starbucks for a coffee and get 10% cash back on that purchase, or do some shopping at Whole Foods and score another 15% cash back, for example.
The startup, which will join Y Combinator’s winter 2023 cohort and recently closed a $2 million pre-seed, is initially focusing on charging stations, in part because it’s an industry that’s about to blow up with federal and state funding. The Inflation Reduction Act, which President Joe Biden signed into law in August 2022, gives all states access to over $1.5 billion in funding to facilitate EV charging projects. That might end up looking like a big push to install infrastructure without much cohesion.
Bluedot wouldn’t say which charging companies it works with to offer its flat fee, but the startup said customers could initiate charging through the Bluedot app at around 60% of all charging stations across the U.S. To grow its partner network, Bluedot is targeting smaller and newer charging companies that might not have the resources to create their own app and payments platform.
“New EV charging companies are seeking solutions like ours to increase visibility and accessibility for drivers, optimize payment processes, and improve utilization rate of charging stations,” Selinay Filiz Parlak, Bluedot’s co-founder and chief operating officer, told TechCrunch. “Bluedot is working on integrating financial technology to help these companies make their charging stations more viable and accessible to drivers.”
“Currently, utilization in most of the charging station networks ranges from 5% to 8%. Bluedot aims to raise this rate above 15%. We began with small charging station companies, but our goal is to bring all brands together with financial technology for users,” continued Parlak.
Bluedot’s main customers today are individual drivers who found the startup through partnerships with auto dealers and ride-share companies. Parlak says Bluedot’s next target is fleets to help them manage expenses and charging processes and get better deals.
“For example, one of our partners is a leasing company that rents cars out to a bunch of delivery drivers who are managed by a fleet manager,” said Parlak. “They want to offer a larger charging station ecosystem, which is easier to bill and then reimburse, which we offer. And they also want to get better deals around electrification.”
Bluedot is also manually pulling data for customers on their charging habits, how much they spend, how much power they use, their top charging locations, the amount of carbon dioxide emissions they’ve prevented by using an EV, and so on. In the future, the company wants to automate that task to make it smarter and more scalable.
During YC, Bluedot wants to focus on growth and product development.
“Our goal is to establish partnerships and make deals leading up to demo day,” Ferhat Babacan, Bluedot’s CEO and co-founder, told TechCrunch. “Specifically, we aim to secure partnerships in the areas of auto dealership, charging networks, and auto-related expenses. Additionally, we plan to initiate pilot tests for the Bluedot Fleet Card.”
Bluedot’s debit card for EV owners offers cheaper charging, cash back by Rebecca Bellan originally published on TechCrunch
Hello and welcome back to Max Q! I hate writing intros, so let’s get to it, shall we?
In this issue:
A startup tackling the “unsexy” parts-ordering workflows
Space tech predictions from Seraphim Space
News from Varda, ClearSpace and more
There is very little room for error in aerospace and defense (A&D) manufacturing. For companies that build products like missiles, rocket boosters and avionics, each part must not deviate more than a hairsbreadth from its technical specifications.
Despite the precise demands of the industry, however, parts ordering is generally done using systems that are only slightly better than carrier pigeon.
To solve this problem, Malory McLemore and Anne Wen founded Stell, a startup that’s building a platform to bring new workflows to parts ordering. The company is hoping that its platform can reduce errors and improve efficiency — two variables that will be key to shoring up America’s industrial base.
From Seraphim Space CEO Mark Boggett, seven predictions on what the space industry has in store this year. First on the list: cell phone connectivity from space.
“Multiple players in the space industry have recently set their sights on direct-to-mobile connectivity from space,” Boggett writes. “While it’s still a very early market with limited existing capabilities, companies such as Apple, T-Mobile, Globalstar, SpaceX, AST SpaceMobile and Lynk Global are targeting this area. Multiple mobile network operators are already on board, even before some of the first operational spacecraft have been launched.”
More news from TC and beyond
ABL Space Systems provided an update on the investigation into the anomaly that caused the company’s RS1 rocket to crash back into the launch pad on its first test flight. (ABL)
China is planning more than 70 launches this year. (SpaceNews)
ClearSpace, a Swiss startup developing in-orbit servicing and debris-removal tech, closed a €26.7 million ($28.9 million) Series A round. (Venturelab)
The European Space Agency wants to enact a “zero-debris policy” for companies launching spacecraft into orbit. (WSJ)
Slingshot Aerospace has a new partnership with HawkEye 360 for the latter company to provide radio frequency data for Slingshot’s space-based monitoring platform. (HawkEye)
Space Capital’s most recent quarterly report found that private investment in space dropped 58% in 2022 compared to the previous year. (TechCrunch)
SpaceX’s agreement with Carnival was expanded, with the cruise company moving to introduce Starlink across its cruise brands. (Carnival)
Varda Space Industries provided a look at its first spacecraft that’s being built in partnership with Rocket Lab. It will launch aboard SpaceX’s Transporter-8. (Varda)
Max Q is brought to you by me, Aria Alamalhodaei. If you enjoy reading Max Q, consider forwarding it to a friend.
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Happy new week! Did you know that TechCrunch has a bunch of amazing newsletters that aren’t this one? If you’re into transportation, don’t miss Kirsten’s The Station. Greg writes our weekly Week in Review (with Kyle currently filling in while Greg is on paternity leave); Sarah does the This Week in Apps newsletter; Mary Ann writes The Interchange, which is our fintech newsletter; and Darrell does the TechCrunch Podcast, which is kind of like a weekly newsletter, but for the holes on the side of your head, rather than the front ones. And there are even more than that, so go get ’em! — Christine and Haje
The TechCrunch Top 3
Brian may have found the perfect MacBook: Brian gives us the ins and outs of the new Apple MacBook Pro 14-inch M2 Max, in which he writes, “It’s a reaffirmation of the ‘Pro’ in MacBook Pro: chunky, heavy, blazingly fast, full of ports and packed with the best the company has to offer.” This might be the 2023 version of “Mikey likes it!” Meanwhile, Matt reviews the 2023 Mac Mini, what he calls “a serious contender with the M2 Pro.
Sounds like more layoffs: Another tech company reveals that its eyes were bigger than its stomach when it comes to hiring. This time, Spotify is the one cutting jobs, Romain reports. The music streaming company will lay off about 600 people, or 6% of its workforce.
Give ’em something to ChatGPT about: After much speculation, Microsoft confirmed that it will invest an undisclosed number of billions in OpenAI, thus extending the companies’ partnership. Kyle has more.
Startups and VC
TechCrunch Live is entering its third season, and Matt is, frankly, ludicrously psyched to be leading the events again this year. The first event is on February 1, 2023, and will feature a timely discussion on what to do if your company can’t raise a Series A. Cambly’s Sameer Shariff and Benchmark’s Sarah Tavel are speaking at the first one — stay tuned for what’s coming down the pike!
And we have five more for you:
That’s a big deel, y’all: Remote work revolution is rolling along, and helping Deel reach $295 million in ARR, Mary Ann writes.
That’s reinsuring: Christine reports that Bling Capital–backed Coverdash unveils its embedded, digital insurance for small businesses.
Om nom nom: Anna reports how, with a focus on patients with chronic illness, Nourish hopes to help Americans eat better.
I wonder what the due diligence was on that deal: Thoma Bravo agrees to acquire digital forensics firm Magnet Forensics for over $1 billion, reports Kyle.
Selecting the cream of the crop: GoodOnes raises money to help make sense of your mess of a camera roll, Haje reports.
Failures are valuable IP: Protect your startup’s negative trade secrets
Patent applications and GitHub codespaces are obvious pieces of intellectual property, but so are the embarrassing mistakes and dead ends that every company encounters.
Rivals can learn a lot from competitors’ failed A/B tests, unsuccessful email campaigns and wasted engineering cycles, writes Eugene Y. Mar and Thomas J. Pardini, attorneys with Farella Braun + Martel LLP in San Francisco.
In this post, they offer advice for safeguarding your “negative know-how,” along with general tips for defining and managing trade secrets.
Three more from the TC+ team:
Raindrops keep falling on my SaaS: Tech forgot its umbrella, writes Natasha M.
It’s not quite that simple: Dominic-Madori is debunking the myths of why venture investors don’t fund diverse startups.
Quite a catch: Christine spoke with four investors about the next big wave for alternative seafood startups.
Big Tech Inc.
Just when Salesforce thought it was safe to go back in the water, the company now has an activist investor coming in and taking a multibillion-dollar stake. Ron writes that while Elliott Management is looking forward to working with Salesforce, there could be something else behind it: “Elliott typically takes a stake in a company to make changes in the way the company operates with the goal of cutting costs and increasing shareholder value. In some cases, it tries to push CEO changes or even sell the company, although that seems less likely in this case.” You be the judge.
And we have five more for you:
No remittance for you: SBM Bank India was told by the India central bank to stop outward remittance transactions, Manish reports.
Find love while binge-watching “Emily in Paris”: Netflix and Bumble are working together to help users bond over popular TV shows, Lauren writes.
Game on: Devin tells us his experience playing Forspoken.
Sinking its clause into payment terms: An antitrust investigation in Germany has it looking into PayPal’s terms for merchants. Natasha L has more.
Don’t throw anything away: Tim rounds up all the climate tech news that’s fit to post, including food waste, wastewater and the UK’s troubled battery industry.
Automating construction makes plain sense on the face of it. It’s one of the world’s biggest industries. It’s also among the most expensive and, often, dangerous. Certainly it checks off the three Ds (dull, dirty, dangerous) of automation quite plainly.
We encountered Kewazo several years back when the Munich-based startup participated in a TC Sessions: Robotics pitch-off. Sometimes startups take a lot of explaining off the bat. This isn’t one. At the center of the offering is the firm’s first product, Liftbot. The system is effectively an automated hoist system that ascends and descends scaffolding systems.
It takes two workers around 20 minutes to install (per the company), is fully battery powered and wireless and is able to arrive at its destination without manual interference. Like a number of construction robotics firms, Kewazo got a nice boost during the pandemic, as construction reopened, but many companies suddenly had trouble filling roles.
“Despite already existing labor shortages, it became impossible for foreign workers to commute back to their home countries and come back,” co-founder and CEO Artem Kuchukov tells TechCrunch. “Many sites in Europe, the Middle East, and Singapore massively suffered from that, as a large percentage of their workforce simply wasn’t there anymore. That was a huge catalyst for construction automation, as companies began to look for ways to sustain their businesses without relying on an uncertain labor supply.”
Today Kewazo is announcing a $10 million Series A. The round, which brings its full fundraising up to around $20 million, was led by Fifth Wall, with participation from Cybernetix Ventures, Unorthodox Ventures and Nemetschek. It follows a $5 million “Pre-Series A” back in September 2021.
“I think it is very useful that companies like Kewazo are disrupting our business,” Bart Gyssels, CIO of Altrad Services Benelux, says in a release tied to the news. ”We will have problems in finding and keeping good personnel — this will be our main focus in the coming years and decades. These innovations are very helpful in attracting and motivating our coworkers and help us to provide our customers with cost-effective and safe services.”
Kuchukov tells TechCrunch that, in spite of general bullishness around construction automation, raising in 2022 was no walk in the park.
“Series A in 2022 was tougher though. We started fundraising at the beginning of April, right when things started to slow down,” he says. “We had a founder’s camp organized by True Ventures in Napa Valley in March and nobody was even talking about the recession yet. But a few weeks later it started. Some of my fellow founders suggested waiting until fall with the raise, but we decided to not rely on the unstable economic situation in the world.”
Among the plans for the money is an increase in headcount. Kewazo currently employs 26 full-time and 11 part-time employees and plans to hire another 15 this year, largely in business and product development.
Construction robotics firm Kewazo raises $10 million by Brian Heater originally published on TechCrunch
The consulting giant reportedly paid around $50 million for Iguazio, a Tel Aviv-based company offering an MLOps platform for large-scale businesses — “MLOps” referring to a set of tools to deploy and maintain machine learning models in production. In a press release, McKinsey says it plans to use the startup’s tech and team of 70 data scientists to bolster its QuantumBlack platform, McKinsey’s data analytics-focused group, with “industry-specific” AI solutions.
“We analyzed more than a 1,000 AI companies worldwide and identified Iguazio as the best fit to significantly accelerate our AI offering — from the initial concept to production, in a simplified, scalable and automated manner,” McKinsey senior partner Ben Ellencweig said in a statement. Over time, he added, the Iguazio and QuantumBlack teams will be fully integrated and work from a single product roadmap, combining the best of both worlds (with any luck).
“Iguazio has a state-of-the-art technology that has generated significant market traction with some of our marquee clients and earned them top-industry recognition,” Ellencweig continued.
Iguazio, whose customers included Payoneer, was co-founded in 2014 by Asaf Somekh, Orit Nissan-Messing, Yaron Haviv and Yaron Segev. The four previously served in senior roles at XtremIO (acquired by EMC), XIV (acquired by IBM), Mellanox (acquired by Nvidia) and Radvision (acquired by Avaya).
Iguazio’s product suite collects data and preps it offline or offline, accelerating and automating AI model training for deployment via APIs. Beyond this, Iguazio attempts to streamline machine learning pipeline steps like scaling, tuning and continuous delivery with features such as rolling upgrades, A/B testing, logging and monitoring.
Prior to the acquisition, Iguazio managed to raised $72 million in venture capital from investors including INCapital Ventures, Pitango VC, Jerusalem Venture Partners (JVP) and Magma Venture Partners according to CrunchBase data. TechCrunch previously reported that the startup was valued at $100 million.
MLOps might not be as sexy as, say, ChatGPT. But demand is growing. By one estimation, the market for MLOps could reach $4 billion by 2025.
Unsurprisingly, there’s no shortage of startups going after the space, such as Comet, which raised $50 million in November 2021. Other vendors with VC backing include Arize, Tecton, Diveplane, Iterative, Galileo and Taiwan-based InfuseAI.
But for McKinsey, the price — and timing — was right where it concerned Iguazio, apparently. The firm notes that Iguazio is its first acquisition in Israel, and that the newly extended team will serve as the foundation for a new QuantumBlack location that McKinsey expects to grow in the coming years.
“Attracting exceptional tech talent and expanding our tech ecosystem will enable us to welcome colleagues from around the globe to Tel Aviv’s exciting tech scene,” McKinsey partner Matt Fitzpatrick said in a blog post.
Over the past year, McKinsey has made several acquisitions in the data analytics space, including Caserta, a firm specializing in data architecture and engineering. SCM Connections, another recent addition to the consultancy’s portfolio, offers services for digital transformation, including building tech stack infrastructure.
McKinsey, eyeing the MLOps space, buys Tel Aviv-based Iguazio by Kyle Wiggers originally published on TechCrunch
Welcome back to Equity, the podcast about the business of startups, where we unpack the numbers and nuance behind the headlines. Natasha is back in the Bay, after five weeks away, so some could say, San Francisco is back.
Big tech: Real quick, you should know that Elliott Management took a multi-billion stake in Salesforce, while Thoma Bravo scooped up a digital forensics company for $1.34 billion. Beyond that, the big tech news this week is Microsoft’s multi-billion dollar, multi-year investment in Open AI. The extended partnership comes with lots of resources, quirks and legal headaches.
Big idea: I’m still thinking about this Anna Heim analysis, “The mirage of dry powder.” I talk about wet capital and failed capital calls, as to contextualize (not shut down!) some of the optimism in the market right now. (Use code “EQUITY” for 50% an annual TC+ membership).
Big innovation (or in this case, reductions): Google’s in-house incubator, Area 120, was severely impacted by Alphabet layoffs and Spotify cut 6% of staff, two layoff stories that had me thinking all about the fact that tech seems to have forgotten its umbrella. We end with tongue-twister note on Quordle, which just got scooped up by Merriam-Webster.
Equity drops at 10:00 a.m. PT every Monday and at 7:00 a.m. PT on Wednesdays and Fridays, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. TechCrunch also has a great show on crypto, a show that interviews founders, one that details how our stories come together, and more!
Cowboy Ventures, the now-10-year-old, Bay Area-based seed-stage focused fund founded by renowned investor Aileen Lee, has closed on two new funds totaling $260 million in capital commitments. The outfit garnered $140 million in commitments for its fourth flagship fund and another $120 million for its first opportunity-type fund (its “Mustang Fund”).
The amount is more than all the capital that the outfit has raised across its previous funds, which were sized at $40 million, $60 million, and $95 million, respectively. Then again, the team has grown over the years from being a one-person firm to an outfit with an investor team, including fintech specialist Jill Williams, who Lee recruited from Anthemis, and Amanda Robson, who was pulled out of Norwest Venture Partners, where she worked with numerous enterprise software companies, including some focused on AI and robotics. (Longtime Silicon Valley attorney Ted Wang is also closely associated with the fund as a “board partner” and advises more than a dozen of its portfolio companies.)
It’s easy to appreciate why LPs committed more capital to Cowboy, even in a market that seems to be actively shrinking given broader market turmoil. First and foremost are its numbers, which look good, particular given the size of its earlier funds. Cowboy was among the first investors in Guild Education, for example, an online education company that’s focused on upskilling frontline employees, and was valued at $4.4 billion when it closed its most recent round of funding in June of last year. Cowboy is also a seed investor in the security and compliance automation platform Drata, assigned a $2 billion valuation in December when it raised $200 million in Series C funding.
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 on $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 were either founded or cofounded by a woman and roughly one-third of them have been founded or cofounded by a person of color. While Cowboy is very much focused on the bottom line, says Lee, 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 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 it’s doing, 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.”
Cowboy Ventures goes bigger, with $260M across two new funds, including an opportunity fund by Connie Loizos originally published on TechCrunch