Navigating the New Normal: Insights from the Cowboy Fall 2023 Investor Offsite

Cowboy Ventures
Cowboy Ventures
Published in
6 min readOct 30, 2023


By Team Cowboy (Aileen, Robby, Jill, Allegra & Matt)

Every fall, our team gets together for an investment team offsite. We reflect on learnings from investments to date, trends in seed investing, areas ripe for innovation, each teammate’s goals, and much more.

With the backdrop of tragedy in Israel and Gaza, it was a sad time to be gathering. We also spent time discussing geopolitical instability, polarization, dysfunction in Congress, and the deceleration across the VC ecosystem; and at the same time, how we’re excited about the ‘cambrian explosion’ of AI-driven capabilities.

We thought folks might enjoy snippets from our recent offsite. Read on for more:

A quick look at how we did on predictions about 2023

We wound up being fairly accurate in many of our predictions, with the notable exception of $Bns (per week, recently!) in funding going to groundbreaking AI platform companies. Some of our predictions:

As predicted, seed activity dropped steeply in the past year¹

Anecdotally, most seed investors slowed their investment pace this year, citing a variety of reasons including portfolio triage, hesitance after overpaying in prior years, worries about catching a ‘falling knife’, tightened enterprise budgets, economic uncertainty, and more.

Seed rounds announced by seed and multi-stage firms have dropped significantly.

Seed seems expensive relative to the market

Seed valuations reached a record high this past year. The median seed round size also grew in 2023, despite downward adjustments in raise sizes and valuations at A and later stages. It could be that seed stage founders are slower to respond to the new climate, and seed founders are planning for more runway because of the climate / conservatism among series A funders. And that there is still too much money at seed. This may drive a higher seed mortality rate than previous years.

If you’re a seed founder, be eyes wide open about the new climate. Potentially adjust your raise, planned burn rate, GTM plans and runway accordingly, knowing that series A and beyond valuations have fallen more steeply both in price and volume than the recent seed market.

The trend at seed does not match series A and beyond.

A potential moniker for 2024: ‘scarification,’ which enables future growth

Did you know in gardening there’s a process called scarification (timely, it’s halloween)? It’s when a seed is roughed up to help it wake up, realize it’s time for the growing process, and enable it to better absorb the water and nutrients around it. Scarring causes seeds to grow into thriving plants.

We expect 2024 to be challenging, and hopefully catalyzing for many — a ‘scarification year’ — for VC-backed startups. Sorry to be the bear-er (sorry, market pun) of bad news, but we advise founders to plan for the worst, while hoping for the best. The jarring and scarring should help companies achieve longer term health.

We anticipate enterprise customer budgets will remain very sober, outside of specific AI driven applications and mission critical infrastructure and security. Compressed public company multiples, financial pressures, higher interest rates, rolling layoffs, reorgs, security concerns, a desire for fewer vendors, and more have made new sales and renewals challenging for many. We hope to be wrong — we’re advising startups to expect enterprise budgets stay tight in 2024.

We expect 2024 to deliver more ‘scarification’ for startups

B2C and B2B2C startups will experience similar pressures. Many businesses got overfunded during peak VC, plus saw unsustainable growth when everyone was WFH internet shopping and shipping. Many will continue to face challenges sans strong business fundamentals.

Fun stuff! To be clear — we have a relatively new fund, and optimism to invest in the next wave of seed stage startups in the coming year.

New infrastructure needs, a continual opportunity for data-driven automation, increased efficiency, better user experiences, AI-native software, and an increasingly insecure world will be just some of the “reasons why” customers will want more capable, high-impact software. There are also myriad business processes that still run on pen and paper and spreadsheets. $Bns are also spent every year on outdated software that users would love to ditch. Plus, it takes a decade or more to build an important tech company. Companies that raise seed in 2023–24 are just getting started on their journey — and the ‘scarring’ of these years will build a foundation for incredible long term resilience.

Across all of these spaces, some attributes we’ll be looking for:

  • Thoughtful, agile, gritty teams. Founders need to do more with less right now. They recognize, attract and retain great talent, identify and creatively overcome constraints, plan for multiple scenarios — and have lots of grit.
  • A rapid pace of learning and innovation across engineering, product & GTM. AI capabilities are growing rapidly — we’re looking for teams who are “learning animals” that quickly pick up on signals, incorporate best practices (including AI), iterate and ship product and go-to-market at high velocity.
  • Attention to business fundamentals. Many VC investments in the bull market were made with less attention to business fundamentals. The software business has been long admired for growing TAMs, and unusually high gross margins, revenue retention, customer LTV, and over time, cash flows. The market seems to want software businesses to act like software businesses again — and we are here for it.

In closing — while times are tough for many, downturns are historically a GREAT time to start and build a tech company.

There’s a reason nearly half of the Fortune 500 was founded during periods of economic distress. Constraints like budget, staffing and time foster more creativity, ingenuity and cultural resilience — leading to better results (having a diverse team is critical for this success too).

If you have an ambitious idea for a tech-driven company in a large market, and hope to partner with a patient, thoughtful and experienced early stage-focused team with a human touch, who will be with you through thick and thin — please give us a holler at Cowboy Ventures.

[1] We use Crunchbase (Cowboy portco) to track seed stage investments made by a set of seed-focused and multi-stage firms — to track trends, and monitor how we’re doing in meeting seed stage companies. Here’s the list of funds whose seed investments we track:



Cowboy Ventures
Cowboy Ventures

A seed-stage focused technology fund backing exceptional founders.