CAT Labs, a startup fighting tech-enabled crime, raises $5.4 million seed round

Infante grew up in Soviet Russia, where she and her family were deeply impacted by the unreliability and corruption of law enforcement as the Iron Curtain fell. Still a kid, she turned to American and British detective shows, like The X-Files and Murder She Wrote, to make sense of the world.

“You couldn’t rely on law enforcement back there,” said Infante. “I grew up watching a lot of cop shows. After the collapse [of the Soviet Union], we got a lot more content, right? When I was a kid in Russia, I learned that I should be afraid of law enforcement, that they’re like the mob—that they have a lot of power and will hurt you. Watching those Western shows, though, I realized that’s the opposite of what it’s supposed to be.”

Infante ultimately became the law enforcement officer she watched on TV, immigrating to the U.S. and becoming a U.S. Department of Justice DEA Special Agent. She served for about a decade, and in that time became disillusioned with the government’s ability to match the speed of technological change. 

“One of the main things that really alarmed me is the pace at which cryptocurrency and other technology was adopted by all these different criminal networks, including adversarial nation states, terrorists, and drug cartels,” Infante told Fortune. “I just realized that we, the good guys, cannot keep up with the bad guys anymore.”

So, Infante struck out on her own, founding startup Cat Labs. And Cat Labs’ value proposition has the allure of what makes spy movie tools appealing; like James Bond’s wristwatch cameras, Cat Labs is building something complicated to do something fundamentally simple—fight tech-enabled crime. The company’s flagship digital asset-focused tool has a clear goal: To help defense and intelligence agencies find and recover crypto. 

Cat Labs launched last year, and now investors (both existing and new) have doubled down. Cat Labs recently raised a $5.4 million seed round, Fortune can exclusively report. New York-based M13 led the round, and existing investors participated, including Castle Island Ventures, CMT Digital and Hash3. This seed round brings the company’s total capital raised to $9.7 million. Cat Labs currently has 14 employees; that team has, over their collective careers, contributed to the take down of more than 300 criminal entities, the company says.

The market opportunity for what Cat Labs does is law enforcement, yes, but that’s the starting point, said M13 managing partner Karl Alomar.

“The key was that we felt very confident that Lili could take this business, that should build that credibility,” Alomar told Fortune. “We believed she could get [this business] into law enforcement and into govtech as a whole, which would build a pretty good baseline of income and revenue for the company. Then, from there, there’d be plenty of opportunities to expand that offering beyond just the initial solution.”

Cat Labs is coming into the market at a time when cybercrime has been booming in conjunction with new technologies, first with crypto and now AI. Though the company’s core product is geared towards helping governmental agencies with their crypto investigations, Cat Labs says the process can be scaled to fight cybercrime much more broadly. 

“It goes back to hackers, scammers, fraudsters using emerging technologies to scale exponentially and globally and at a pace that we’ve never seen before,” said Infante. “AI is really scary in this context. It really allows criminals to take some of the manual things they were doing to effectuate their crimes, like phishing campaigns or spam messages, and just make them so much smarter. They can make them look like they come from real people, and at scale.”

We’re talking about a world with more convincing phishing attacks and deepfakes, and more rapidly-created synthetic identities. That said, Infante points out that scammers have often been some of the most effective users of new technology.

“Bitcoin was first adopted by drug dealers on the Dark Web,” said Infante. “The Tor browser was first mass-adopted by bad actors. It’s the same thing here. When this empowering technology comes out, the bad guys are the first ones to use it. They don’t have rules and policies to follow… That’s what we need to start thinking about and tackling, and we’re not even close.”

But Infante’s idea is that we can get closer. A lot closer. Because like those detective shows she grew up with and the spy movies we’ve all seen, there’s always another case. There’s always another chase. 

Elon update…Elon Musk’s valuations are looking up, and in some cases are sky-high. Bloomberg reported that Musk’s SpaceX is talking about pursuing a tender offer that would value the company at $350 billion. Meanwhile, Fidelity reportedly bumped up the value of both Musk’s xAI and (perhaps more surprisingly) of X, formerly Twitter. 

See you tomorrow,

Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
Submit a deal for the Term Sheet newsletter here.

Nina Ajemian curated the deals section of today’s newsletter. Subscribe here.

VENTURE DEALS

– Soda Health, a Bentonville, Ark.-based health equity platform developer, raised $50 million in Series B funding. General Catalyst led the round and was joined by Bruce Broussard and existing investors Lightspeed Venture Partners, Define Ventures, Qiming Venture Partners USA, and SVB Capital.

– Eagle Electronics, a Solon, Ohio-based semiconductor and cellular module manufacturer, raised $14 million in funding. The O.H.I.O. Fund led the round and was joined by Asymmetric Capital Partners.

– First Resonance, a Los Angeles-based digital manufacturing solutions provider, raised $12.3 million in funding. Third Prime led the round and was joined by Craft Ventures, Blue Bear Capital, and E12.

– Pathway, a Menlo Park, Calif.-based live AI systems developer, raised $10 million in seed funding. TQ Ventures led the round and was joined by Kadmos, Inovo, Market One Capital, Id4, existing investor Lukasz Kaiser, angel investors, and others.

– MakersHub, an Austin-based accounts payable platform, raised $7 million in seed funding. QED Investors and TTV Capital led the round and were joined by TRB Advisors, existing investor Dash Fund, and angel investors.

– GAIB, a Singapore-based financial infrastructure developer for AI computing, raised $5 million in pre-seed funding. Hack VC, Faction, and Hashed led the round and were joined by Spartan, CMCC, L2IV, angel investors, and others.

– GROWL, an Austin-based at-home fitness platform, raised $4.8 million in seed funding. Skip Capital led the round and was joined by Kima Ventures, Teampact Ventures, Ciryl Gane, and others.

– Tixel, a Melbourne-based entertainment ticket resale platform, raised $4.5 million in Series B funding. Touch Ventures led the round and was joined by Lalotte Ventures and others.

– Nurture Boss, a Scottsdale, Ariz.-based AI-powered multifamily housing leasing solutions provider, raised $4 million in Series A funding. AZ-VC led the round and was joined by In Revenue Capital and existing investor PHX Ventures.

– Briefcase, a London-based AI-powered accounting automation platform, raised $3 million in seed funding. Earlybird led the round and was joined by Entrepreneur First, Tiny, and angel investors.

– Stackfix, a London-based AI-powered software comparison platform, raised $3 million in seed funding. Chalfen Ventures led the round and was joined by Seedcamp, helloworld, and angel investors.

PRIVATE EQUITY

– Aechelon Technology, backed by Sagewind Capital, acquired the radar simulation division of Compro Computer Services, a Dallas-based software solutions provider for the aerospace and simulation industries. Financial terms were not disclosed.

– Align Capital Partners acquired MKB Company, a Belleville, Pa.-based erosion control, pollution prevention, and stormwater management products manufacturer. Financial terms were not disclosed.

– CCMP Growth Advisors acquired Combined Caterers, a Charlotte-based event management and catering services provider. Financial terms were not disclosed.

– SmartBear, backed by Vista Equity Partners and Francisco Partners, acquired QMetry, a Santa Clara, Calif.-based software quality testing platform. Financial terms were not disclosed.

– SolomonEdwards, a portfolio company of Renovus Capital Partners, acquired Steele Consulting, an Atlanta-based tax consulting firm. Financial terms were not disclosed.

– Sunland Asphalt, a portfolio company of Huron Capital, acquired Metro Pavers, a Henderson, Colo.-based asphalt maintenance and paving company. Financial terms were not disclosed.

– The Colt Group, backed by Capstreet, acquired Plant Services, Inc., a Worden, Mont.-based repairs and services provider for heavy process facilities. Financial terms were not disclosed.

EXITS

– VSE acquired Kellstrom Aerospace, a Davie, Fla.-based aerospace aftermarket business, from AE Industrial Partners for $200 million.

– Advanced Capital Group acquired Pequeño Caesarmex, a Monterrey, Mexico-based Little Caesars Pizza franchisee, from Alta Growth Capital. Financial terms were not disclosed.

PEOPLE

– ICV Partners, a Miami-based private equity firm, promoted Lloyd Metz and Zeena Rao to managing partners.