Term Sheet — Wednesday, July 11

5 Qs WITH A DEALMAKER

Even though Polina is out, she prepared this Q&A below for Term Sheet. Please do continue sending deals this week to [email protected].

SC Moatti has access to one of the largest communities of product managers in the world. Now, she has raised more than $13 million for a debut fund to invest in companies building “products that count.”

Moatti sold her last company to Facebook and worked at the tech giant for almost two years as a product leader. Shortly after her departure, she founded venture firm Mighty Capital alongside Products That Count, a community of more than 200,000 product executives.

Her investment thesis? Use her network of early adopters to invest in product-driven companies. Mighty Capital co-invests with top-tier VCs in Series B and C rounds. Its portfolio includes two 2019 IPO candidates, she says — Airbnb and DigitalOcean. Mighty’s average investment ranges between $500,000 to $1 million.

“We’ll invest where we actually add value, which is a product-driven thesis,” Moatti said. “We add value as companies acquire some scale and need a boost in exposure.”

Term Sheet caught up with Moatti to discuss her new fund, Mighty Capital’s product-driven investment thesis, and what areas product executives find exciting right now.

TERM SHEET: Why did you launch a $13 million fund at a time when we’re seeing more and more firms raise mega-funds?

MOATTI: We raised the fund because we wanted to help more entrepreneurs who came to us through Products That Count. We just needed more capital, more leverage, and more skills. We raised a small fund because we have a lot of our own money invested in this. We are here to make money and return money for our investors. We have a track record of returning more than 6 times of the money invested, and we want to keep it that way.

We also know that with a $13 million fund, we have a much greater chance at getting extraordinary returns than if we raised a $100 million fund. Since everyone is going bigger, it creates an opportunity for us.

You say that a lot of Silicon Valley firms create “artificial differentiation.” What do you mean by that?

MOATTI: Because I’m an entrepreneur, I come from the world of technology where when you build a tech product, it’s always unique. It could be that you have that extra feature that makes you completely different from your competitors. When you’re building an investment firm, your product is money. Money is green for everybody, so how do you differentiate? Some people think that bigger is better, so they raise a bigger fund. That’s a lot of what we’re seeing today with these massive funds, like the Vision Fund and the Sequoia fund. That’s one strategy, which is go big or go home.

Then, there’s another strategy which is this sort of segmentation not exactly based on the needs on the entrepreneur. Rather, it’s based on rules, like, “We only invest in New York,” or “We only invest in fintech.” And that strategy has been around for around six or seven years with mixed results.

What we’re saying now is that it actually makes more sense to look at a more product-minded strategy. What is my unique differentiation in terms of the value I add specifically to entrepreneurs? Every VC will tell you they have connections. But what does that mean? What kind of connections? What depth & breadth of connections? These are questions founders need to ask.

What do you think about the effect mega-funds, such as SoftBank’s $100 billion Vision Fund, are having on the ecosystem?

MOATTI: It’s almost a completely different business. They are basically looking for the one deal in a decade. We’re very lucky to be in Airbnb, but that’s not the game I play. The game I play is that there are many entrepreneurs who are building thriving businesses that are going to get great returns, but it’s not going to be a 1000x return. I don’t need 1000x. All I need is a 3 to 5x on most of my deals, and I think I can deliver that. If you want to return money to your investors, being capital efficient and raising small amounts of money is actually the wiser thing to do. I know it’s not super popular to say that in Silicon Valley, but I do what works.

What are product managers talking about right now?

MOATTI: Genomics. We’re seeing a lot of people transitioning from tech to life sciences. It’s because the intersection of the two is becoming much more exciting, and frankly, there’s not a lot of people who can wear both hats. If you start your career in life sciences, you need to be very patient because you need to deal with regulation and red tape. If you’re starting your career in technology, you have to be very impatient because everything changes all the time. To constantly switch from patient to impatient is really hard, which is why I think there are very few people who understand the intersection well, which is where genomics falls. That’s the conversation of today — what are people building and where are product managers going? This expands into artificial intelligence and machine learning as well. We’d love to see more applications of AI in the genomics space. That’s the conversation of today.

The conversation of tomorrow has to do with cryptocurrency and blockchain. While we see product executives jump into genomics and life sciences, we see them talk about blockchain and crypto. In particular, discussions focus on how the emerging industry will disrupt the liquidity process — so M&A, IPO, fundraising. We see a lot of those types of conversations, but it’s still very unclear what the applications are. That’s why it’s the platform of tomorrow.

You don’t like talking about diversity at your firm. Why?

MOATTI: We don’t talk a lot about it. If we did, we would spend so much time doing it that we wouldn’t be able to run our firm. We have a unique set up where two thirds of our investment decision-makers are women. So we obviously get invited to talk about diversity a lot, but we believe that actions speak louder than words. We focus on the action of building our firm, making great investments, rather than talking about it.

THE LATEST FROM FORTUNE...

• Nokia Signs $1.2 Billion Deal With China Mobile

• Ripple Hires Facebook Payments Exec and Names New CTO (by Jeff John Roberts)

• A Former Apple Engineer Is Facing Up to 10 Years in Jail Over the Theft of Self-Driving Car Secrets (by David Meyer)

• How an Amateur Hacker Stole Top-Secret Drone Documents From the U.S. Air Force (by Hallie Detrick)

VENTURE DEALS

• Convene, a New York City-based shared workplace firm, raised $152 million in Series D funding. ArrowMark Partners led the round and was joined by investors including Declaration Capital, QuadReal Property Group, Revolution Growth, and RXR Realty.

• Monday.com, the New York and Tel Aviv-based team management platform for offices, announced it raised a $50 million Series C round. Stripes Group led the round and was joined by investors including Insight Venture Partners and Entrée Capital.

• Xometry, a Lexington, Ky.-based on-demand manufacturing platform, raised $25 million in funding. The Foundry Group led the round and was joined by investors including Almaz Capital, BMW i Ventures, GE Ventures, Highland Capital Partners and Maryland Venture Fund. It also acquired MakeTime, another on-demand manufacturing company.

• Cosential, an Austin-based CRM and proposal automation software for architecture, engineering and construction firms, closed $34 million in funding. JMI Equity led the round.

• Lumiata, a San Mateo, Calif.-based AI firm deciding healthcare risks, raised $11 million. Khosla Ventures and BlueCross BlueShield Venture Partners led the round, and were joined by Sandbox Industries, Intel Capital and others.

• Nurx, the San Francisco-based telemedicine platform that offers birth control, raised $36 million in series B funding. Kleiner Perkins led the round, and was joined by investors including Union Square Ventures, Y Combinator, and Lowercase Capital.

• Higi, a Chicago-based maker of widely accessible health monitoring machines, raised $21.3 million in series C funding. Investors include Flare Capital Partners and 7wireVentures.

• Tamr, a Cambridge, Mass.-based firm that unifies data using AI, closed $18 million in funding. Investors include SBI Investment, INTAGE Open Innovation Fund, Samsung Ventures, Fenox Venture Capital, and Alumni Ventures Group.

• Kyligence, a Shanghai and Santa Clara, Calif.-based data analytics company, raised $15 million in series B funding. Eight Roads Ventures led the round and was joined by investors including Redpoint Ventures, Cisco, China Broadband Capital, and Shunwei Capital.

• Pegasus Solar, a San Francisco-based maker of solar panel mounting systems, raised $10 million funding. Ecosystem Integrity Fund led the round and was joined by investors including Okapi Capital.

Seatfrog, a London-based firm for live bidding of airline and rail seats, raised $6 million Series A led the round.funding. Octopus Ventures

• PactSafe, an Indianapolis-based cloud contracting platform, raised $5.5 million in series A funding. Mercury Fund and Signal Peak Ventures, led the round, and was joined by investors including Elevate Ventures and Vulpes Testudo.

• Lodgify, a Barcelona-based vacation rental software startup, raised $5 million in series A funding. Nauta Capital, HOWZAT Partners, Business Angels, and Intermedia Vermögensverwaltung were the investors.

• Perceptive Automata, a Cambridge, Mass.-based AI maker for autonomous vehicles, emerged from stealth and raised $3 million in seed funding. Investors include First Round Capital.

• DNA Script, a Paris-based cell and gene therapy firm, raised $2.7 million in grants from Bpifrance.

• CapLinked, a Los Angeles-based firm creating a product to tokenize equity, raised $2.5 million in funding. Alphabit Fund, Translunar One, Kenetic Capital, NextProtocol Ventures and BKCM were the investors.

• N3rd Street Gamers, a Philadelphia-based amateur esports network, received an investment from Comcast Spectacor in June.

• ShooWin, a New York-based sporting tickets platform, raised an undisclosed amount of funding. Cuneo & Co.And Bellnote Partners led the round.

PRIVATE EQUITY DEALS

• MediaMath, a New York City-based programmatic advertising firm, raised $225 million in funding from Searchlight Capital Partners.

• Ardian acquired a minority stake in FiloBlu, an Italian digital consulting company. Financial terms weren't disclosed.

• Anne Arundel Dermatology Management, a portfolio company of New MainStream Capital, acquired Virginia Dermatology and Skin Cancer Center, a Norfolk, Va.-based dermatology services provider. Financial terms weren't disclosed.

• Black Bay Energy Capital invested in Clean Chemistry, a Boulder, Colo.-based provider of technology for oilfield water treatment. Financial terms weren't disclosed.

• Bow River Capital Partners recapitalized Control Technology & Solutions, a Ballwin, Mo.-based holding company in the energy efficiency and power generation industry.

• Branded Cities, a portfolio company of Shamrock Capital, acquired a stake of the Chicago assets of Red Star Outdoor, a signage operator. Financial terms weren't disclosed.

• DBi Services, a portfolio company of Sterling Partners, acquired Digital Traffic Systems, an intelligent transportation systems company. Financial terms weren't disclosed.

• CORE Industrial Partners acquired Hayes Manufacturing Services, a Sunnyvale, Calif.-based precision-machined plastic and metal components maker. Financial terms weren't disclosed.

• Illuminate Education, a portfolio company of Insight Venture Partners, acquired IO Education, an Irvine, Calif.-based provider of SaaS-based student, data, and professional management tools for K-12 institutions. Financial terms weren't disclosed.

• NexusTek, a portfolio company of Abry Partners, acquired Zumasys Cloud Hosting, an Orange County, Calif.-based cloud computing solutions maker. Financial terms weren't disclosed.

• Opus Agency, a portfolio company of Growth Capital Partners, acquired Level 2 Design, a Santa Rosa Beach, Fla.-based technical design and production company. Financial terms weren't disclosed.

• Yukon Partners and Grey Mountain Partners invested in 48forty Solutions, an Atlanta-based whitewood pallet recycler. Financial terms weren't disclosed.

• PumpMan Holdings, a portfolio company of Soundcore Capital Partners, acquired a Southwest Waterworks Contractors, a Phoenix-based designer of municipal pumps and pump systems. It also acquired Groundwater Pump & Well, a Healdsburg, Calif.-based provider of clean water solutions. Financial terms weren't disclosed.

• Rock Hill Capital Group recapitalized LQC Pipe and Supply, a Houston-based wholesale distributor of pipes, valves, and fittings. Financial terms weren't disclosed.

• Palladium Equity Partners invested in Spice World, an Orlando, Fla.-based spice seller. Financial terms weren't disclosed.

OTHER DEALS

• AT&T plans to acquire AlienVault, a San Mateo, Calif.-based cybersecurity and crowd-sourced threat management platform. Financial terms weren't disclosed. AlienVault’s investors include Adara Ventures, Institutional Venture Partners, Trident Capital, Kleiner Perkins Caufield & Byers, GGV Capital, Correlation Ventures, Intel Capital, Jackson Square Ventures, and Top Tier Capital Partners.

• Box acquired Butter.ai, a San Francisco-based AI platform for work apps. Butter.ai previously raised $3 million from investors including General Catalyst and Slack.

• Bomgar, an Atlanta-based maker of identity and access management solutions, acquired Avecto, a U.K.-based security software maker. Financial terms weren't disclosed.

• Canada Pension Plan Investment Board (CPPIB) and Silicon Valley-based investor TCV acquired a 37% stake in Sportradar, a Swiss sports data group. The deal values the firm at 2.1 billion euros ($2.5 billion). Read more.

• Capital Dynamics acquired Advanced Capital SGR, a Milan-based alternative asset manager and fund-of-funds manager. Financial terms weren't disclosed.

• Mimecast acquired Ataata Inc., an Arlington, Va.-based cyber security training and awareness platform. Financial terms weren't disclosed.

• Generate Capital is investing $200 million in electric buses and partnering with BYD Motors. Read more.

• BusBank acquired Buster, a New York City-based platform for booking buses, shuttles, and vans. Financial terms weren't disclosed.

EXITS

• Aptiv acquired Winchester Interconnect, a Connecticut-based maker of custom engineered interconnect solutions, from Snow Phipps Group for $650 million.

• Audax Private Equity acquired MNX Global Logistics, a Long Beach, Calif.-based provider of logistics services, from the Riverside Company. Financial terms weren't disclosed.

• BDO USA acquired SWC Technology Partners, a Chicago-based IT consulting firm, from Svoboda Capital Partners. Financial terms weren't disclosed.

• Conifex Timber acquired Cross City, Fla.-based Suwannee Lumber Company and Glenwood, Ar.-based Caddo River Forest Products from Blue Wolf Capital Partners. Financial terms weren't disclosed.

• AXA Investment Managers acquired a stake in DATA4, a Paris-based provider of colocation data centers, from Colony Capital. Financial terms weren't disclosed.

• Otsuka Holdings acquired ReCor Medical, a Palo Alto, Calif.-based medical device maker for treating hypertension, from Sofinnova Partners. Financial terms weren't disclosed.

FIRMS + FUNDS

• AE Industrial Partners, a Boca Raton-based private equity firm,closed its second private equity fund closed on $1.36 billion.

• Lightspeed Venture Partners, of Menlo Park, Calif., closed its twelfth fund at $750 million, and third select fund at $1.05 billion.

• Long Hill Capital Venture Partners, a Shanghai-based venture firm, has raised over $252 million for its second fund, according to an SEC filing.

• Cayuga Venture Fund, an Ithaca, N.Y.-based firm, plans to raise $100 million in its sixth fund.

• MTech Capital, a Los Angeles-based, raised $75 million in an initial close from three investors for its insurance tech venture fund.