Microsoft for years has been an active acquirer of gaming companies, including small independent ones. But that may be changing.

Driving the news: The tech giant yesterday announced a giant restructuring of its Xbox unit, including thousands of job cuts and the divestiture of five gaming studios.

• Two of the studios (Ninja Theory and Undead Labs) have undisclosed buyers, while two others (Double Fine and Compulsion Games) will be spun out to their founders.
• A process to divest the fifth studio, France's Arkane, is just beginning.

What they're saying: "Our business today is not healthy ... We must reset Xbox," group CEO Asha Sharma wrote in a memo. "We have also learned that we are not the best home for every type of studio: In a typical year, we lost 64 cents for every dollar we invested [on small/mid-sized studios]."

Catch up quick: Shortly after becoming Microsoft CEO in 2014, Satya Nadella joined a Fortune conference in Aspen where he talked excitedly about the company's growth opportunities in gaming. Not just hardware, but the games themselves.

• His first big swing was on Mojang Studios, the Swedish maker of Minecraft. That was followed by a $7.5 billion acquisition of ZeniMax in 2021 — which included Arkane — and then its $63 billion buy of Activision Blizzard in 2023.
• Meanwhile, former Xbox boss Phil Spencer complemented those deals with a spate of smaller acquisitions.

Look ahead: Sharma's memo argued that the moves are more about reorganization than retreat, with Game File's Stephen Totilo reporting that there could be additional investment in the Minecraft platform.

• At the same time, however, it's hard to see her breaking out the M&A checkbook any time soon.

The bottom line: Microsoft just dashed the dreams of gaming developers, and their VC backers.

Proxima Fusion, a German fusion energy startup, raised €411 million at a €2.4 billion post-money valuation, led by XTX Ventures and East X Ventures.

Why it's the BFD: It's the largest VC round ever for a European fusion energy company.

• Europe was an early hub for fusion energy development, but now is racing to keep pace with American and Chinese innovations.

Other investors include RWE, Google, KfW Capital, Sprind, Burda Principal Investments and insiders Plural, UVC Partners, Balderton, Cherry Ventures, DST Global Partners, Brevan Howard Macro Venture, Lightspeed, DTCF, redalpine, Leitmotif, Elaia, CDP Venture Capital, Bayern Kapital, and the EIC Fund.

Elsewhere: Standard Nuclear, a Tennessee maker of fuel for small modular reactors, set U.S. IPO terms that could give it around a $3.7 billion valuation.

The bottom line: "Proxima is building a demonstration fusion system in Munich, which it expects to bring online in the 2030s. The design is what's known as a stellarator — a complex, twisty machine that's difficult to build but promises an easier path to operation if done correctly." — Alan Neuhauser, Axios Pro

• Keyfactor, a Cleveland-based digital identity management company, raised more than $1b led by Summit Partners. axios.link/4fkxMg9

• Oratomic, developer of a fault-tolerant quantum computer, raised $300m in Series A funding led by Arch Venture Partners, Spark Capital, Khosla Ventures led, joined by Bezos Expeditions, Index Ventures, General Catalyst, Lowercarbon Capital, Bain Capital, Formation, and Nebular. axios.link/4fm8pup

• Tripo AI, a Chinese builder of interactive 3D foundation models, raised $150m in Series A3 funding from Geely Capital, 4399 Network, Tanwan, Giant Network, Fosun Capital, Orinno Capital, CoStone Capital, Addor Capital, T-Capital, and Muhua Tech Ventures. axios.link/4pea6O8

⚡ Quaise Energy, a developer of geothermal energy drilling tech, raised $134m in Series B funding led by Prelude Ventures. axios.link/3T2SCIk

• Norm AI, a legal services startup, raised $120m in Series C funding at a $1.2b post-money valuation. Khosla Ventures led, joined by Blackstone, Craft Ventures, Bain Capital Ventures, Coatue, Vanguard, New York Life, and TIAA. axios.link/3T31ayU

• Super, a Toronto-based savings app, raised US$65m in Series D funding led by TPG at a $1.2b valuation, per Fortune. axios.link/4wP2bJN

• BIZAY, a Portuguese platform for customized products, raised $55m in Series D funding. Indico Capital Partners led, joined by Lince Capital, Cedrus and BPF. axios.link/4eNOggP

• Sherpa AI, a Spanish data-sovereign AI development startup, raised $18m from Forgepoint Capital and insiders Mundi Ventures, Ekarpen, Allegra Holdings, and SETT. axios.link/4vNCSYd

• Agave, a construction finance startup, raised $15m in Series A funding, per Axios Pro. Accel led, joined by YC. axios.link/4f1Hfb3

• GeoSurge, a London-based brand visibility platform, raised $12m in seed funding. AlbionVC led, joined by Play Ventures, Octopus Ventures, Celero Ventures, Boost Capital, Passion Capital, and Tuesday Capital. axios.link/4y6iovd

• Luffy AI, a British developer of adaptive control solutions, raised £8.1m in Series A funding. BGF led, joined by MIG Capital and insiders Bow Capital, Chrysalix, Momenta and UKI2S. axios.link/4vQKgSA

• Whering, a U.K. digital wardrobe startup, raised $7m in seed funding led by eBay Ventures and Google AI Futures Fund. axios.link/4p8zAfL

• M1X Global, an NYC-based sovereign finance infrastructure startup, raised $5.5m in seed funding. Paradigm led, joined by Breed VC. axios.link/4p95Z5U

• Adaptive Insurance, an Austin, Texas-based provider of parametric insurance, raised $5m from IAG Firemark Ventures, Sunna Ventures, Room & Pillar, Connecticut Innovations, Congruent Ventures, and Seraphim Space. axios.link/4bvzqJA

⚡ TaiSan, a U.K. battery materials startup, raised £4.7m in seed funding led by Eos Advisory and Mercia Ventures. axios.link/4bsDTwB

• Aylight, a Swiss photonics startup, raised €4.5m in pre-seed funding. Elaia and Swisscom Ventures led, joined by Verve Ventures and Plug and Play. axios.link/4y8XT17

• Arc Intelligence, a German enterprise finance platform, raised €4m in seed funding. 42Cap led, joined by 468 Capital and IBB Ventures. axios.link/3SD2ecR

• Argosy acquired a control stake in K&L Freight Management, a St. Charles, Ill.-based provider of asset-light 3PL services. axios.link/3SCy7SO

• Avance invested in Lexxel, a Rochester, N.Y.-based provider of maintenance and repair services to critical infrastructure. axios.link/4gnyM4n

⚡ Blackstone agreed to acquire Dresser Utility Solutions, a provider of utility metering equipment, from First Reserve. axios.link/3QRGnhb

🏀 Blue Owl Capital agreed to buy a minority stake in the NBA's Cleveland Cavaliers. axios.link/4y4N5ku

• Capitol Meridian Partners acquired Westway Enterprises, a Herndon, Va.-based provider of classified workspace delivered as a service. axios.link/4vkUUjF

• InfraVia Capital Partners agreed to acquire D-Marin, a Greece-based marina operator, from CVC Capital Partners for over €1b. axios.link/4y84OHI

• Kinderhook Industries acquired and merged Jack Doheny Cos. and Vacuum Truck Rentals into a single platform for specialty infrastructure equipment rental. axios.link/4fj8bUW

• Kanawha Scales & System, an Investcorp portfolio company, acquired Strack Scale Service, a Cincinnati-based scale calibration and service company. axios.link/4aB8Caz

• Long Ridge Equity Partners acquired a majority stake in GoCharting, a multi-asset orderflow charting platform. axios.link/4azR6Uc

• Mat Tech Industrial Services, an Allied Industrial Partners portfolio company, acquired Hook Set Transportation, an industrial hauling company operating within the Houston-Beaumont Corridor. axios.link/4vV2B0Y

• RMH Systems, a Rotunda Capital Partners portfolio company, acquired Top Shelf, a Columbus, Ohio-based material handling integrator. axios.link/3T0AKOf

• Permira invested in Quadrante, an Iberian consultancy focused on engineering, architecture, environment, and sustainability. axios.link/4eLAnjb

🎂 Sentinel Capital Partners acquired DecoPac, an Anoka, Minn.-based provider of cake decorating solutions, from Kohlberg & Co. axios.link/4yfErQv

🚑 Surplus Solutions, an NMS Capital portfolio company, acquired DCM BioServices, a Frederick, Md.-based provider of laboratory automation solutions. axios.link/4fjI3t8

🚑 TJP, a Renovus Capital Partners portfolio company, acquired FX2 Virtual, a life sciences commercial operations agency. axios.link/3QWRZzw

• Unity Partners invested in the advisory services business of Meaden & Moore, a Cleveland-based provider of forensic and accounting services. axios.link/4pa17gH

• Vista Equity Partners and Quinti Capital offered to buy French ad-tech firm Criteo (Nasdaq: CRTO), per Bloomberg. axios.link/4p9UjzF

• Bleichroeder Acquisition III, a tech SPAC, raised $300m in its IPO. axios.link/43OALaf

• Cult.Fit, an Indian gym chain with over 700 locations, filed draft IPO paperwork. Backers include Temasek and Tata Digital. axios.link/4vKvdtG

• Hub International, a Chicago-based insurance broker owned by Hellman & Friedman, plans to seek around $3b in its IPO, per Bloomberg. Other backers include T. Rowe Price, Alpha Wave Global, and Temasek. axios.link/4wqTNQf

⚡️ Standard Nuclear, an Oak Ridge, Tenn.-based maker of fuel for small modular reactors, set IPO terms to 18.3m shares at $18-$21. It would have a $3.7b fully diluted value, were it to price in the middle, an plans to list on the NYSE (STDN). Standard Nuclear has raised over $180m from firms like Decisive Point, Welara, Fundomo, Crucible Capital, and Washington Harbour. axios.link/4grcMFF

• Syntiant, an Irvine, Calif.-based developer of ultra-low power chips, filed for an IPO that Renaissance Capital estimates could raise $300m. It reports a $61m net loss on $272m in revenue for 2025, and plans to list on the Nasdaq (SYTN). Syntiant raised over $300m from firms like M12, Intel Capital, Applied Ventures, Atlantic Bridge Capital, Alpha Edison, and Miramar Digital Ventures. axios.link/4faE9lg

• Descartes (Nasdaq: DSGX) acquired Drivin, a leading provider of last-mile delivery management solutions in Latin America. axios.link/4vW5Hly

🚑 Halma (LSE: HLMA) acquired Dreampath Diagnostics, a French provider of automated workflow solutions for anatomical pathology labs, from backers like Summit Partners. axios.link/4vJ2NQO

• Navigator Global Investments (ASX: NGI) acquired a portfolio of minority, net revenue-share interests in alternative asset managers from Stable Asset Management. axios.link/4vQzNXu

🚀 Advent International agreed to invest €109.4m for a 7% stake in Italian rocket maker Avio (Milan: AVIO). axios.link/3RmHx4o

• Fiserv (Nasdaq: FISV) has discussed selling its debit card network to big banks like JPMorgan or Bank of America, per Reuters. axios.link/4vX4gTW

🚑 Vertex Pharmaceuticals (Nasdaq: VRTX) agreed to acquire endocrinology biotech Crinetics Pharmaceuticals (Nasdaq: CRNX) for $10b in cash, or $85 per share (102% premium to yesterday's closing price). axios.link/4p65IR7

• Arctos, a unit of KKR, raised $6.2b for a new GP solutions fund. axios.link/3QJXtxw

• B Capital raised $500m for its third early-stage fund. axios.link/4gqg8Zw

• Bregal Milestone, a PE firm focused on European software, raised €915m for its third fund. axios.link/4fnVQ1K

🚑 Regal Healthcare Capital Partners, an NYC-based PE firm focused on health care services, raised $610m for its fourth fund. axios.link/3SReuX6

• Adam Biren joined AEA Investors as a partner and head of capital formation. He previously was with Apollo. axios.link/4y3POuN

• Scott Dadich joined Hannah Grey VC as a venture partner. He's a former editor-in-chief of Wired and, more recently, co-founder of Godfrey Dadich Partners. axios.link/4y7WIiu

• Rob Holcomb joined Halifax Group as an operating executive. He previously was director of analytics at Johnson & Johnson. axios.link/4vX3fLC

• Prosper Vignone joined Bridge Growth Partners as a senior principal. He previously was with Siris Capital. axios.link/4p8ikaf

Wall Street expects massive Q2 earnings, although some wonder if the hurdle has been set too high, Axios' Matt Phillips reports.