'It was scary': How Aileen Lee launched her own VC firm after 13 years at Kleiner Perkins and be

Publish date: 2024-06-23
2022-05-02T11:03:00Z

After spending more than a decade at Kleiner Perkins, Aileen Lee made what felt like an enormously risky career decision: In 2012, she went out on her own and founded a seed fund, Cowboy Ventures (named after her son, Cowboy Stinson). It was much rarer in those days for anyone to fire up a new fund, but on top of that, she was one of the first women in venture capital to start her own firm. 

"It was scary," Lee said of her decision to leave Kleiner. "It was like leaving the Harvard of venture capital. I was wondering after leaving, 'Would anyone still talk to me?'"

The leap of faith for Lee has been worth it: Cowboy Ventures has invested in over 140 startups and raised three funds, with the most recent one closing at $95 million. 

Her investments include Dollar Shave Club, which sold to Unilever for $1 billion in 2016, the edtech unicorn Guild Education (valued at $3.75 billion in the summer), and, most recently, the no-code marketing tool Mutiny, which raised an $18.5 million Series A in September led by Sequoia Capital. Others in Cowboy's portfolio include Chime, which is headed for an initial public offering, and Product Hunt (which sold to AngelList in 2016 for $20 million, TechCrunch reported, citing a person close to the situation).

With that track record, Lee is ranked No. 2 on Insider's Seed 25 list of top female investors and No. 33 on Insider's Seed 100 list. Both lists were compiled with data from Tribe Capital.

Lee learned the trade of startup investing from John Doerr, a famed investor and the chair of Kleiner Perkins, and she was soon racking up Series A and Series B deals for Kleiner Perkins, like the consumer megahit Rent the Runway.

In 2010, Lee noticed a trend: Her peers, including Steve Anderson and Ron Conway, were forgoing backing startups at the midstages in favor of seed investing, often being the first check into a startup. These were riskier investments into startups that hadn't proved themselves, but the early funding gave them an outsize share of the profits relative to those of investments down the line.

"The seed investors were just starting earlier and taking more risks when there was really, very little due diligence," she said.

She was intrigued and soon learned the key to seed investing was just as much about working together with other early-stage investors as it was about supporting founders.

"It seemed a little more collaborative, like they were coinvesting with each other," she said. "And I'm definitely by nature more of a collaborator. I really like to partner with others."

So she left the comfort of her established role and took a similar risk on herself.

These days, Lee prides herself on helping founders, not being their overlord. She helps with hiring, financial plans, crafting the perfect pitch deck, and troubleshooting bumps. And she offers tough love, in contrast to this era of super "founder friendliness," as she put it.

"I think a lot of founders are just being shined a lot of time. And I think it's important for them to actually hear what people are worried about — where they may have blind spots, bumps that are coming ahead in the road — so that they can be prepared," she said.

"Even though we don't lead Series A or Series B, we'll help them find a great lead," she added. "Sticking by people through hard times is actually like one of the things that I feel really proud about."

Lee is also the one who coined the term "unicorn," a word for startups worth more than $1 billion, in a 2013 TechCrunch article. When Lee was writing the story, "I had substituted in 'megahit,' 'home run,' 'Godzilla,' but none of it sounded right. And then I put in 'unicorn,' and it was just so much more fun to read. And it captured both the wings and the playfulness and the fact that it's special."

She added: "I had no idea it was going to take off."

Aside from seed investing, Lee is on another mission: getting more women into venture capital. In 2017, Lee cofounded the nonprofit All Raise, an organization that works to mentor women in venture capital and match women and nonbinary founders with funders, with Sequoia's Jess Lee and her fellow Seed 100 honoree Kirsten Green.

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