Strattam Capital deployed about a quarter of its second fund into three platform deals as it closed the pool this month on $230 million.
The Austin firm takes control positions in founder-led IT companies.
From the pool Strattam plans to make three more platform deals, plus three to five add-ons, all across the business-to-business IT space, Bob Morse, co-founder and managing partner, told Buyouts.
Fund II, activated in February 2018, invested in SSB, a data management and analytics provider for the sports and education industries; Rock Solid Technologies, a software-as-a-service government and IT services company; and Acendre, a cloud-based talent management platform for regulated industries.
Those deals took up about a quarter of Fund II’s committed capital, sources familiar with the firm said.
Strattam also will focus on software companies that use artificial intelligence and machine learning to provide analytics for the consumer-packaged-goods segment.
An example of this strategy is Strattam’s earlier investment in Blacksmith Applications, a software platform that enables food-service and retail companies manage, plan and track their advertising promotions.
Brands including Nestle, Kraft Heinz and Unilever Food Solutions use Blacksmith to distribute their promotions to retailers.
With Strattam’s support, Blacksmith created Ember Insights, a proprietary AI and machine-learning tool, to predict which promotions will do well and which will not, based on the collected data.
Promotion is the second biggest expense for consumer brands, which makes such data insights particularly valuable, Morse said.
Strattam, founded in 2013 with offices in Austin and San Francisco, typically invests in technology companies that need operational support for growth but are otherwise established.
Its three key investment verticals are enterprise software, digital infrastructure and technology-enabled services.
On average, a Strattam portfolio company will post $20 million in revenue when the firm acquires it and $50 million to $100 million in revenue at the time of sale, Morse said.
The firm also prefers opportunities outside tech hubs.
“There is an enormous amount of capital that goes into Silicon Valley, but 75 percent of the business is outside,” Morse said. Being based in Austin, “we understand what it’s like to be a business in this part of the country.”
Strattam’s investors include a few multifamily offices, a few insurers and endowments, and a foundation, a person with knowledge of the firm said.
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