Top venture capital firms and university endowments have a long and lucrative relationship. But it may be fraying.

The big picture: Endowments often get preferential access to VC funds managed by premier investors.

• Some of this is alumni largesse and/or inertia, but most is a genuine effort by VC firms to direct their (expected) returns toward where they can contribute to a greater good.
• University endowments, meanwhile, pitch themselves to VCs as that greater good, and often employ an allocation strategy that includes overweighted exposure to venture capital (i.e., the Yale Model).

Driving the news: On-campus protests and altercations over the war in Gaza are causing some VCs to question this status quo.

• This is part of a broader business blowback against pro-Palestinian rallies and statements by college students, specifically those that neglected to criticize Hamas for its terrorist attack on Israel, and also against responses by school administrators.

What they're saying: No venture capitalist wanted to go on the record, in part because the situation is so fluid and in part because they view it as counterproductive to publicly criticize their own investors. But I spoke with partners at several brand-name firms, and here's a quick sampling:

• "We invest in Israeli entrepreneurs. It feels crazy to then be sending returns from those investments to schools that are allowing their Jewish students to feel unsafe."
• "We've historically taken a 'moral high ground' approach of not taking money from most Middle Eastern sovereigns. I'm not necessarily saying that we stop accepting universities as LPs, but maybe we no longer differentiate in the same way."

Caveat: It's possible that some VCs view LP preference via the opposite geopolitical prism, but I haven't heard from them yet.

The bottom line: No VC says that they've rejected a university endowment over this issue, nor that they definitely plan to do so, and it's possible that passions will eventually cool.

• That said, it's intensifying chatter that could alter one of the industry's most foundational funding pillars.

Google has agreed to invest up to $2 billion into Anthropic, a San Francisco-based generative AI startup that recently secured $4 billion from Amazon.

Why it's the BFD: Not only does this escalate Big Tech's proxy fight over the industry's next big platform shift, but also comes on the same day that the Biden administration unveiled an "aggressive" executive order on artificial intelligence.

Details: Google's investment includes $500 million upfront. In April it invested hundreds of millions into Anthropic for what was then a 10% stake. These deals often include cloud services in lieu of actual cash.

• Other investors include Salesforce Ventures, Zoom Ventures, Spark Capital, and embattled FTX founder Sam Bankman-Fried.

The bottom line: "Anthropic is the developer of Claude 2, a rival chatbot to OpenAI's ChatGPT that's used by companies including Slack, Notion and Quora ... Claude 2 has the ability to summarize up to about 75,000 words, which could be the length of a book. Users can input large data sets and ask for summaries in the form of a memo, letter or story. ChatGPT, by contrast, can handle about 3,000 words." — Hayden Field, CNBC

• Seurat, a Wilmington, Mass.-based 3D metal printing startup, raised $99m in Series C funding. Nvidia and Capricorn co-led, and were joined by Honda Motor, Cubit Capital and insiders True Ventures, SIP Global Partners, Porsche Automobil Holding SE, Denso Global, General Motors Ventures, Maniv Mobility and Xerox Ventures. https://axios.link/3QBdTVN

• JSSI, a Chinese chipmaker, raised $82m. SL Capital (formed by Legend Capital and SK Capital) led, and was joined by insider Panorama Capital. https://axios.link/40wC0sp

• Skyroot Aerospace, an Indian provider of small satellite launch services, raised $27.5m in pre-Series C funding led by Temasek. https://axios.link/40gCH8O

Betteromics, a Redwood City, Calif.-based life science data platform, raised $20m in Series A funding. Sofinnova Partners and Triatomic Capital co-led, and were joined by Shakti. www.betteromics.com

• Goodbytz, a German developer of robotic kitchen assistants, raised €12m in Series A funding. Oyster Bay led, and was joined by Block Group. https://axios.link/46PYI0S

• ZeroRisc, a British developer of commercial software built on the OpenTitan project, raised $5m in seed funding led by Cambridge Angels. www.zerorisc.com

• Boundless Rider, a Medford, Mass.-based insurtech focused on motorcycles, raised $4.25m, per Axios Pro. American Family Ventures led, and was joined by Assurity Life Insurance, SiriusPoint and Belmont Capital. https://axios.link/3QzZDNc

Fidelity wrote down the value of its shares in Twitter/X by another 8% during the month of September, or nearly 65% since investing more than $300 million alongside Elon Musk's $44 billion takeover.

• Apax Partners agreed to buy the consumer research unit of Ascential (LSE: ASCI) for up to £700m. Ascential also agreed to sell its digital commerce business to Omnicom Group (NYSE: OMC) for $900m. https://axios.link/3QzP1hm

• Authentic Restaurant Brands, a portfolio company of Garnett Station Partners, completed its $225m take-private acquisition of Fiesta Restaurant Group, parent company of Pollo Tropical restaurants. http://authenticrb.com

⚡ Bernhard Capital Partners agreed to buy the gas distribution business of Entergy (NYSE: ETR) for around $484m. www.entergy.com

🚑 Blue Owl Capital agreed to acquire funds managed by Cowen Healthcare Investments, which represents around $1b in assets. https://axios.link/3seO1pC

• Madison Industries, a Chicago-based industrial holding company owned by Sequoia Heritage, agreed to buy the health care business of CAE (TSX: CAE) for C$311m. https://axios.link/3tPUeZn

• Oakley Capital agreed to buy a majority stake in Alerce, a Spanish provider of transport and logistics software. https://axios.link/3QibJZX

• Outdoor Living Supply, a Rochester, Minn.-based portfolio company of Trilantic Capital Management, acquired Apache Stone, an Arizona and Nevada-based distributor of masonry, hardscape and landscape supplies. www.outdoorlivingsupply.net

🚑 Lexeo Therapeutics, a New York-based gene therapy startup focused on genetic cardio and CNS conditions, set IPO terms to 9m shares at $13-$15. It would have a $364m fully diluted market value, were it to price in the middle, plans to list on the Nasdaq (LXEO), and raised around $185m from firms like D1 Capital Partners (13.7% pre-IPO stake), Longitude Capital (13.7%), Omega Funds (11.1%), Lundbeckfonden Ventures (10.4%), Janus Henderson (7.8%), PBM Capital (7.4%), and Eventide Asset Management (5.9%). https://axios.link/3Skrbat

🍜 Maliuji, a Chinese hot-and-sour noodle chain, picked CMB International and Huatai Securities to lead a Hong Kong IPO, per Bloomberg. https://axios.link/3FHlrju

🚑 Aimei Health Technology, a small-cap health care SPAC, increased its IPO size by 20% to $60m. https://axios.link/49chgKg

• JVSPAC Acquisition, a SPAC aimed at the intersection of lifestyle and tech, filed for a $50m IPO. https://axios.link/3QBS2h6

• Thunder Power, a premium EV maker, agreed to go public at a $400m pre-money enterprise value via Feutune Light (Nasdaq: FLFV), a SPAC led by Tony Tian (US Tiger Securities). https://axios.link/3sb89su

⚡ Global Infrastructure Partners agreed to sell five solar power stations in Brazil to Engie Brasil Energia for $646m. https://axios.link/40f6rTu

• MidEuropa agreed to sell Profi Rom Food, a Romanian grocery chain, to Ahold Delhaize (Ams: AD) for €1.3b. https://axios.link/3s2ZgBv

• Asos (LSE: ASOS) is considering a sale of its Topshop apparel brand, per Sky News. https://axios.link/3Qe1TIB

• Aurelius Group is in talks to buy The Body Shop, a beauty products retailer owned by Brazil's Natura & Co., per Reuters. https://axios.link/3QDfivl

🚑 Healthpeak Properties (NYSE: PEAK) and Physicians Realty Trust (NYSE: DOC) agreed to merge in an all-stock deal valued at around $21b. https://axios.link/479HOdd

• Shein, the Chinese fast-fashion retailer valued by VCs at $66b, bought the Missguided brand from Frasers (LSE: FRAs). https://axios.link/40ikMP1

⚡ TC Energy (NYSE: TRP) is seeking to sell a minority stake in the ANR Pipeline Co., which is values at around $3b, plus a minority of its Mexico operations, per Bloomberg. https://axios.link/3sb1WwQ

• UPS (NYSE: UPS) agreed to buy LA-based returns software and services group Happy Returns from PayPal (Nasdaq: PYPL), which had acquired Happy Returns in 2021. www.happyreturns.com

Andreessen Horowitz expects to target around $3.4 billion for its next core early-stage and seed-stage funds, representing a slight increase to its prior efforts, Axios' Kia Kokalitcheva reports.

• One twist is that the firm will ask, although not require, limited partners to invest via a new master vehicle that would feed into sub-funds (including some of its sector-specific vehicles), per a source familiar with the plans. A bit like what Sequoia Capital has done (save for the voluntary part).
• Fundraising will launch around year-end, with hopes to hold final closes by next April.
• Andreessen Horowitz, which declined comment, plans to raise new growth, crypto and bio vehicles in 2025.

🚑 Abingworth raised $356m for a new clinical co-development, co-investment fund. https://axios.link/3SkJJYj

• Ares Management raised $6.6b for its second fund focused on private asset-based credit. www.aresmgmt.com

• Digital Space Ventures, a London-based fintech VC firm, is raising up to $40m for its second fund, per an SEC filing.

• I4d Ventures of Paris raised €16m for a pre-seed fund. https://axios.link/45MUsxD

• Korea Investment Partners raised $60m for its first fund focused on Southeast Asia. https://axios.link/3Qddsjj

🚑 Sofinnova Partners raised $200m for its first digital medicine VC fund. www.sofinnovapartners.com

• SYN Ventures has raised more than $75m for a new fund focused on seed-stage cybersecurity startups, with a final close expected by year-end. www.synventures.com

• Nick Ducoff joined the Solana Foundation as head of institutional growth. He previously was a venture partner with G20 Ventures. https://axios.link/3FAAyeP

• Michael Hui is joining Bain Capital, per Bloomberg. He previously led private equity in China for Goldman Sachs. https://axios.link/3tYnlcW

Go deeper: The 2023 bull has turned bearish