Dear venture capitalists,

I've been covering your industry for over two decades, through booms and busts and back again. If there is to be another two decades, you'd better change your behavior. And quick.

The basic VC model is cyclical. Raise money, invest that money, exit via IPOs or strategic sales, and then use those exits to raise more money.

• Get chubby on fees, fatter on carry, and then gleefully obese the more times you rinse and repeat.

But it doesn't work if you stop exiting companies.

• Limited partners are in this for the coin too, and for years have been stuck in a liquidity drought of your making.
• VCs let startups stay private longer, often well past the hypergrowth phase that justified sky-high valuations. Now they're praying some still will mature into those inflated prices.
• It's swinging for the fences on every pitch, rather than taking the single or double that's available.

A whopping 37% of "unicorns" are being held for at least nine years by VC funds, including 13% that are past the 12-year mark, per PitchBook and the NVCA. Remember when you told LPs that your fund had a 10-year distribution period?

• And please don't blame public markets for the holes you've dug. The Nasdaq, Dow and S&P 500 all recently hit record highs.
• Venture funds in this environment should be harvesting, not hoarding.

Want to irritate an LP? Ask them about all the VC fund extensions and continuation vehicles they're getting asked to approve.

• For most institutional investors, venture capital is more a nice to have than a must have. They will move on, and you'll become emaciated.
• Maybe the Ivy League endowments stay, but they currently have donation issues that are acting like a de facto denominator effect.

In short, you're blowing it.

• Reverse course now. Both of our jobs depend on it.

Xaira Therapeutics, an AI drug discovery startup, launched with more than $1 billion in funding co-led by Arch Venture Partners and Foresite Capital.

Why it's the BFD: Mostly the massive check size, which includes the largest investment in Arch's 39-year history.

• Xaira also is a landing spot for CEO Marc Tessier-Lavigne, the former Genentech chief scientific officer and Denali Therapeutics co-founder who last year resigned as Stanford University president after findings of research manipulation in his lab (even though Tessier-Lavigne himself was cleared of wrongdoing).

Other investors in the San Francisco-based company include F-Prime, NEA, Sequoia Capital, Lux Capital, Lightspeed Venture Partners, Menlo Ventures, Two Sigma Ventures, the Parker Institute for Cancer Immunotherapy, Byers Capital, Rsquared, and SV Angel

The bottom line: "Xaira will combine machine learning, data generation and therapeutic product development to build a platform for drug discovery … Former FDA Commissioner Scott Gottlieb, Nobel laureate Carolyn Bertozzi, and former Johnson & Johnson CEO Alex Gorsky are just a few of the who's who of industry veterans who will sit on Xaira's board." — Annalee Armstrong, Fierce Biotech

🚑 Endeavor BioMedicines, a San Diego-based biotech focused on fibrosis, raised $132.5m in Series C funding from AyurMaya, Fidelity, Invus, SymBiosis Capital Management, Velocity Capital, and Woodline Partners. axios.link/3UeB2hn

• Parloa, a German conversational AI platform, raised $66m in Series B funding. Altimeter led, and was joined by EQT Ventures, Newion, Senovo, Mosaic Ventures, and La Familia Growth. axios.link/4brEI6L

🚑 Midi Health, a Menlo Park, Calif.-based virtual menopause care provider, raised $60m led by Emerson Collective, per the NYT. GV also participated. joinmidi.com

• Tines, a Dublin-based no-code security automation platform, raised $50m in Series B extension funding. Accel and Felicis co-led, and were joined by Addition, CrowdStrike Falcon Fund, and SVCI. axios.link/3Uu0m4w

• FlexAI, a French, raised $30m in seed funding. Alpha Intelligence Capital, Elaia Partners and Heartcore Capital co-led, and were joined by Frst Capital, Motier Ventures, and Partech. axios.link/3QiPmEq

• Nagomi Security, a security and threat exposure management startup, came out of stealth with $30m from TCV, Team8, CrowdStrike Falcon Fund and Okta Ventures. nagomi.security

🚑 IveaCare, a Minneapolis-based developer of neuromodulation devices, raised $27.5m in Series A funding. Vensana Capital led, and was joined by Treo Ventures and Hatteras Venture Partners. axios.link/3w3HJuQ

• Stark Future, a Spanish off-road electric motorcycle maker, raised €25m from Big Bets. axios.link/4b9smjw

• Sublime Security, a Washington, D.C.-based email security platform, raised $20m in Series A funding. Index Ventures led, and was joined by insiders Decibel Partners and Slow Ventures. sublime.security

• BforeAI, a predictive security platform with offices in the U.S. and France, raised $15m in Series A funding. SYN Ventures led, and was joined by Karma Ventures, Karista, Addendum Capital, and the Partnership Fund for New York City. bfore.ai

• Turnkey, a New York-based provider of wallet infrastructure for crypto developers, raised $15m in Series A funding. Lightspeed Faction and Galaxy Ventures co-led, and were joined by Sequoia Capital, Coinbase Ventures, Alchemy, Figment Capital, and Mirana Ventures. axios.link/4aMsDsN

• Outpost, an Austin, Texas-based network of managed semi-truck parking facilities, raised $12.5m in Series A funding. GreenPoint Partners led, and was joined by Speedwagon Capital Partners. outpost.us

• 401go, a retirement program setup platform for financial advisors, raised $12m in Series A funding, per Axios Pro. Next Frontier led, and was joined by Rally Ventures. axios.link/4de0Vqz

• Zefir, a French residential real estate transaction platform, raised €11m from Sequoia Capital and Zigg Capital. axios.link/44cbp5C

🚑 Alaffia, a New York-based provider of health plan claims operations software, raised $10m in Series A funding, per Axios Pro. FirstMark Capital led, and was joined by GingerBread Capital and insiders Anthemis, Aperture Venture Capital, 1984 Ventures, Remarkable Ventures, and Tau Ventures. axios.link/3xPS4ex

🚑 Summer Health, a New York-based pediatric telehealth startup, raised $11.7m in Series a funding, per Axios Pro. 7wire Ventures led, and was joined by insider Lux Capital. axios.link/3JwucyX

⚡ Aquabattery, a Dutch energy storage company, raised €6m in seed funding. EIT InnoEnergy led, and was joined by InnovationQuarter, Invest-NL and Init Power. axios.link/4b7j0EU

• Bokra, a Egypt-based wealth management startup, raised $4.6m co-led by DisrupTech Ventures and SS Capital. axios.link/3Jsg5e6

• PeppercornAI, a Cardiff-based insuretech, raised £3.3m from Wealth Club, EHE, and Angels Invest Wales. axios.link/3Wa2TBZ

• Bump, an LA-based financial management platform for creators, raised $3m in seed funding from ImpactX, Capitalize, and Serac Ventures. usebump.com

• RockFi, a Paris-based wealth management company, raised €3m led by Varsity I. axios.link/3QgEOpl

🚑 Handl Health, an LA-based provider of health care price transparency tools, raised $2.4m in seed funding co-led by Mucker Capital and Everywhere VC. handlhealth.com

🌎 General Galactic, an El Segundo, Calif.-based deriver of methane from captured CO2, raised $1.9m from Box Group and Refactor, per TechCrunch. axios.link/49RyJH5

• Sorted, a London-based developer of sorting tech for recycling and waste management, raised £1.6m in seed funding led by Pi Labs. axios.link/4d9fpaW

🚑 Alcanza Clinical Research, a Lake Mary, Fla.-based portfolio company of Martis Capital and Alpha Leonis Partners, acquired Puerto Rico-based FDI Clinical Research. axios.link/44cDQAk

• Apax Digital invested in IANS, a Boston-based provider of research and advisory services for the infosec market. iansresearch.com

• Astatine Investment Partners acquired NRG Riverside, a British renter of specialist waste collection vehicles, from Palatine. nrgriverside.com

• Gamut Capital Management agreed to buy DEX Imaging, a provider of managed print services, from Staples, a portfolio company of Sycamore Partners. deximaging.com

🚑 KKR agreed to acquire Immedica Pharma, a Stockholm-based drug manufacturer, with existing backer Impilo reinvesting to become an equal owner. axios.link/4aCZzDX

• Masonite (NYSE: DOOR) agreed to sell its architectural segment to Industrial Opportunity Partners. masonite.com

• Redwood Capital Investments is in talks to buy Marquette Transportation, a Paducah, Ky.-based provider of marine towing services, from BDT & MSD Partners, per Bloomberg. axios.link/3UvbFJw

• The Stephens Group invested in VisionSafe, a Hawaii-based provider aircraft cockpit smoke displacement systems. axios.link/4deF1mQ

• Apollo Global Management sold a stake in Atlas SP, the lending business it acquired last year from Credit Suisse, to MassMutual. axios.link/3JvJxj8

• CoStar Group (Nasdaq: CSGP) agreed to buy Matterport (Nasdaq: MTTR), a Sunnyvale, Calif.-based spatial data company, for around $2.1b in cash and stock. Matterport shareholders include Lux Capital (8.4%) and DCM (2.3%). axios.link/49S2yHx

🚑 CVC Capital Partners is weighing options for its control stake in listed Italian drugmaker Recordati (Milan: REC), per Bloomberg. axios.link/4aPpMPH

• Thunes, a cross-border payments company that's raised over $200m, agreed to acquire Tilia, a West Hollywood-based payments platform for online games and virtual worlds that raised over $20m from JPMorgan and Dunamu. axios.link/3Wb3hA7

• Allfunds (Ams: ALLFG), a funds distribution group, has ended sale talks, per Bloomberg. axios.link/3Us5hTr

• ComplyAdvantage, a London-based for financial crime risk platform, acquired Golden, an SF-based self-constructing knowledge graph. ComplyAdvantage has raised over $140m from firms like Ontario Teachers' and Index Ventures, while Golden had raised around $60m from firms like a16z (which is investing in ComplyAdvantage as part of the merger). axios.link/4dexMLG

• IBM (NYSE: IBM) reportedly is in advanced talks to buy HashiCorp (NYSE: HCP), an SF-based multi-cloud automation software provider whose market cap jumped to $5.8b on the news. axios.link/4aMzoed

⚡ Ithaca Energy (LSE: ITH) agreed to buy most U.K.-based oil and gas producing assets from Italy's Eni (Milan: ENI) for €754m. axios.link/49PIDsO

• Robinson Helicopter, a Torrance, Calif.-based helicopter manufacturer, acquired Wilmington, Mass.-based drone maker Ascent AeroSystems. axios.link/4aK4z9V

🚑 Sanofi (Nasdaq: SNY) is seeking to sell off its consumer-health business, which could fetch more than $20b, per Bloomberg. axios.link/4aZIHHk

🚑 ShiftMed, a McLean, Va.-based health care staffing platform, acquired CareerStaff Unlimited, a per diem and contract managed service provider for health care, from Genesis HealthCare. ShiftMed backers include Panoramic Ventures, BIP Ventures, and Georgia Tech Innovation Fund. shiftmed.com

• Uniti Group (Nasdaq: UNIT) is in talks to reunite with telecom provider Windstream, around a decade after their split, per Bloomberg. axios.link/4b9ozm1

• Shasta Venture failed to get LP approval to form a continuation fund, Axios' Kia Kokalitcheva scoops.

• Amkan Ventures, a Dubai-based fund-of-funds for emerging VCs, is halfway toward its $10m target, per Axios. axios.link/3w7iyYa

• Lightyear Capital raised a single-asset continuation fund for portfolio company ampliFI Loyalty Solutions. amplifiloyalty.com

🚀 Seraphim Space of London held a first close on its second VC fund, which is targeting more than the £70m it raised for Fund I in 2016. axios.link/4batXFu

• Anzu Partners promoted Patrick Harrington, Kyle McQuighan, and Wendy Papakostandini to principals on its business services team. anzupartners.com

• Playground VC promoted Justin Ernest to principal and Rahul Meka to senior associate. playground.vc

Bond investors are losing confidence that high inflation is ending and that the Fed will offer relief, Axios' Neil Irwin writes.

• More economic shoes may drop as the world adjusts to markedly higher rates — which were briefly at higher levels last fall, but aside from that episode, have not been this high since 2007.
• The 10-year Treasury note yielded 4.58% yesterday morning, up from 3.86% on Feb. 1.

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