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Cowboy Ventures Founder Says "Winter Has Arrived For Startup Financing"

The Huffington Post The Huffington Post 24/02/2016 Quora
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These questions originally appeared on Quora - the knowledge sharing network where compelling questions are answered by people with unique insights.Answers by Aileen Lee, founder of Cowboy Ventures, on Quora.Q: How bad is the current market (early 2016) for venture financing?A: Unfortunately, I believe winter has arrived for tech startup financing. Winter has or will hit late to mid-stage financings first this year, but there will be a trickle down effect down to Series A and seed, and it has already started. This isn't all bad news -- a lot of great enduring tech companies were built during downturns. And founders / teams who are starting and building companies during this period will likely be in it for the right reasons and building mission-driven cultures, because it won't be easy to get rich quick through tech startups in the coming years.
Q: You are one of the most prominent and successful women venture investors in tech. Why aren't there more women in venture capital?

A: Oh so many reasons. We're actually looking to add someone to the Cowboy team -- and because we are majority female, and two of us are Chinese females from New Jersey with similar post-college careers, in our discussion yesterday our team agreed we should make sure to be look for and interview lots of candidates who are different from us and have different profiles, different personality types. We care most about whether someone will be a magnet for great founders, an outstanding investor over time, and will be fun to work with.

Unfortunately, I don't think that's a conversation or a commitment enough venture teams have. Likely because many firms have done well historically with a homogeneous team, so there isn't a sense that adding new people would make things better. It would also cause a change in internal culture/conversation, and many partners like the way things are.

Lots of studies have shown that more diverse teams have better creativity, better outcomes, better financial results -- but there is not enough diversity by ethnicity, gender, or personality type in venture capital. And just in the past 2 months a number of firms have issued press releases saying, "We're thrilled to announce our newest partner ... another Caucasian male." With all due respect, it's frustrating to see these few open slots continue to go to people who are so similar to the people already there.

Entrepreneurs have a tremendous amount of influence now by choosing which investors they work with, and calling on a diverse group of potential investors when they raise a round. Hoping founders will vote with their feet by showing the VC world they want to work with modern, diverse teams -- that might be the best way to impact the VC ranks in the short term.

Q: Why did you name your venture firm Cowboy Ventures?

A: My husband and I have three kids -- twin daughters who were four years old when we got pregnant with our son. We thought it would be fun to ask our girls to come up with a name for their little brother -- it could be the baby's code name, and/or they would forget the task but remember feeling included, as they often forgot (and still forget) to put dirty clothes in the hamper, feed the dog, etc.

We were really surprised when a few days later the girls were skipping around the house singing, "We're going to have a baby brother, and his name is going to be Cowboy Handsome Shiny Dolphin!"
Like all good Palo Altoans we have backyard chickens, and one is named Shiny Dolphin -- so that was out -- so we called our son Cowboy Handsome for the following 3 months until he was born, and the name kind of stuck, so he's named Cowboy.

Fast-forward to raising our first fund. I was hoping there would be a fund, but until it was raised, I didn't want to spend a lot of time coming up with a super distinctive, evocative name until the ink was dry. So I called the project the "Cowboy Fund" while fundraising, as "Cowboy" seemed to be a good pregnancy project name.

After closing, we spent a bunch of time with some of our most creative friends trying to come up with a new name. We wanted something that reflected that we are a bit non-traditional, hard working, and entrepreneurial, and that we value people who want to be out on the frontier and are willing to go for long stretches without a lot of support or resources; able to make due without all the comforts or tools desired at times; and that we don't take ourselves too seriously -- we have a sense of humor.
Many domain name purchases later, we kept coming back to Cowboy. It communicated everything we were looking for, so that's how we became Cowboy Ventures.

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