At Cowboy Ventures, we’ve championed “unsexy tech” as a core thesis for years. My partner, Ted Wang, previously outlined our perspective in this area, and I'd like to share our updated thinking. I’ll explore what "unsexy tech" entails, how it has evolved—particularly with the application of AI —and the types of founders and companies we are eager to back.

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We love to spend time in these legacy, often technologically overlooked,  less glamorous fields – from decades old back-office software, to processes that still run on pen, paper, and phone calls. We target sectors with existing low NPS (Net Promoter Score) software and increasing openness and demand for technology.

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We believe AI can dramatically enhance these solutions, making them more efficient through specialized models that improve accuracy. AI also enables traditionally manual businesses to better leverage their own data—a common challenge for most companies- as many struggle to get use out of the valuable data flowing in and out of their own businesses.  Ultimately, AI can also streamline workflows, enhance ROI, and help businesses improve margins, save costs, generate additional revenue, and operate more efficiently, impacting their bottom line more significantly than older processes and software.

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At Cowboy we look at opportunities in two ways: verticalized / industry specific and horizontal / pain point specific. 

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Verticalized focus

Technology is becoming more and more verticalized - building tailored solutions for specific industry pain points. We believe this is even more powerful with AI, building on our longstanding focus on vertical SaaS, we see this next evolution of verticalized AI as even bigger. 

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These companies still often require a founder with deep, market-specific expertise. But, a  specialized model can compound that knowledge by building on market specific data which makes them more effective over time compared to generalized models.

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We see huge opportunities in sectors that are traditionally ignored by tech, often located outside major coastal tech hubs, and can hugely benefit from more efficient operations, improved margins and potential expansion of access to additional products and services. These include manufacturing ($7T), logistics ($2T), construction ($2T), professional services ($2T), insurance ($1.6T), agriculture ($1.5T), utilities ($1.1T), govtech ($500bn), and supply chain ($29bn). 

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These industries are massive, and yet if you speak to experts, they would tell you that most of their workflows are run manually, data is siloed (if stored digitally at all), hindering effective processes and decision making. If there is software, it was built decades ago and leaves much to be desired. These industries often rely on decisions made in vacuums, and typically off of long term institutional knowledge that goes away as people retire or switch companies. There are opportunities to improve operations for these industries whether its workflow, payments, CRMs, communications, etc. We're particularly excited about platforms that could serve as operating systems or systems of record for an industry, starting with a hair on fire problem as the wedge in to embed itself and expanding from there. 

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Two Cowboy Portfolio companies building verticalized solutions for historically underserved industries by tech are Arcol and Portex. Arcol is revolutionizing workflow for architects with a platform that enables real-time collaboration and applies data and context to projects for dynamic, confident management. Portex is a freight procurement tool that improves communication between shippers and brokers and provides freight spend analytics, enabling shippers to save time and money on their freight procurement processes. 

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Horizontal Solutions

While all-in-one solutions are huge opportunities for unsexy industries, we also see tremendous potential in horizontal solutions that address mundane problems across various sectors. These solutions often disrupt manual, painful, and complex processes or outdated software that remains invisible to most unless directly encountered, such as compliance, risk management, security, accounting, tax, audit, and reporting.

Every company faces these challenges, regardless of size, often handling them through outsourcing, key individuals, or dedicated teams. Despite their ubiquity, the nature and complexity of these issues are usually understood only by those directly involved but create massive opportunities and often have huge companies serving these processes. Examples of this include:

• Broadridge ($23bn) started in 1962 which support client trades and communications
• Computershare ($11bn) a transfer agent started in 1978 which serves 50% of public companies in the US market as they register to go public
• Citrix (~$13bn) founded in 1989 is a cloud computing and desktop virtualization software

There are huge opportunities to modernize these processes using technology and AI, making operations more dynamic and offering real-time access to data and insights.

Three examples from the Cowboy portfolio are Drata, Vic.ai, and Eisen. Drata offers continuous compliance automation across frameworks like SOC2, HIPAA, GDPR, and FedRAMP, reducing compliance time by 60%-80% while maintaining accuracy. Vic.ai revolutionizes accounting by automating invoice processing, PO matching, and bill payments, enhancing efficiency and providing AI-driven insights for better financial forecasting and planning. And, Eisen streamlines offboarding compliance for financial institutions, simplifying a traditionally manual, complicated, and resource-intensive process and improving customer experience.

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If you are building or ideating in “unsexy tech” whether it’s a horizontal solution or vertical-specific platform, we would love to chat! At Cowboy, we love backing seed and pre-seed stage founders and it’s never too early to start a relationship. Reach out at Jill@cowboy.vc.

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