Venture capitalists believe a tech economy slowdown is near, with softness starting to emerge in portfolio performance reports.

What to know: Most VC-backed startups hit their Q1 targets, investors tell me, but the percentages are lower than in prior quarters. Beats are also down, and there's extra deterioration for startups whose fiscal quarters ended after March 31.

• This is on top of increased challenges for some startups to get follow-on funding, which has been exacerbated by a meaningful pullback from crossover investors.

What they're saying: "It's still hard to tell right now if some of our portfolio company plans were too aggressive, basing projections on 2021 growth, or if this is real 'canary in the coalmine' stuff," one veteran VC says. "The real measuring stick will be Q2 numbers, particularly if a much larger percentage of companies miss their numbers."

• There were a few investors who told me that they aren't yet seeing biz metrics problems within their portfolios, but even most of them said that they think it's just a matter of time.
• No one identified a particular area of greater or lesser concern, although consumer seemed to be a redder flag than was enterprise.

The bottom line: The venture capital industry has exploded in size since the last economic downturn, which means there's an over-indexing on inexperience for what may come next.

Source: Giphy

Embracer, a Stockholm-listed holding company for video game publishers, agreed to buy three gaming development studios and an IP catalog from Tokyo-listed Square Enix Holdings for $300 million in cash.

Why it's the BFD: Part of Square Enix's divestment rationale is to help fund blockchain gaming. Or, put another way, tech deals in 2022 can be about blockchain even when they don't actually involve blockchain.

Details: The included studios are Crystal Dynamics, Eidos-Montréal and Square Enix Montréal, while the IP catalog includes Tomb Raider, Deus Ex and Legacy of Kain.

Intrigue: Microsoft has an existing partnership with Crystal Dynamics. That would have made it a logical acquirer, but perhaps it felt such a deal would have complicated efforts to get Activision Blizzard approved by antitrust regulators.

• Speaking of MSFT/ATVI: Berkshire Hathaway has increased its stake in Activision Blizzard to 9.5%. It's a merger arbitrage play, betting the deal will close.

The bottom line: "It's one of gaming's biggest companies, Japan-based Square Enix, unloading most of its top western studios and IP for pocket change to one of the industry's most voracious acquirers." — Stephen Totilo, Axios Gaming

• Turtlemint, an Indian insurance comparison platform, raised $120m in Series E funding. Amansa Capital, Jungle Ventures and Nexus Venture Partners co-led, and were joined by Vitruvian Partners and Marshall Wace. http://axios.link/fbKm

🚑 Hello Heart, a Menlo Park, Calif.-based provider of cardiovascular digital therapeutics, raised $70m in Series D funding. Stripes led, and was joined by IVP, Resolute and BlueRun Ventures. http://axios.link/gSAf

• LinearB, a Santa Monica, Calif.-based engineering analytics and developer workflow optimization startup, raised $50m in Series B funding. Tribe Capital led, and was joined by Salesforce Ventures and insiders Battery Ventures and 83North. www.linearb.io

• Open, an Indian neobank, raised a reported $50m at a $1b valuation. IIFL led, and was joined by insiders Tiger Global, Temasek and 3one4 Capital. http://axios.link/csC5

• Venly, a Belgian blockchain wallet startup, raised €21m in Series A funding. Courtside Ventures led, and was joined by Transcend Fund, Coinbase Ventures, Tioga Capital, High-Tech Gründerfonds, Fortino, Plug and Play, Leadblock Partners, Imec Istart, Powerhouse and Alpaca VC. http://axios.link/lOD5

• GamerGains Lab, a crypto-based play-and-earn platform, raised $5.8m in seed funding. Cadenza Ventures led, and was joined by FTX Ventures, Tiger Global, Winklevoss Capital, Alumni Ventures Group, CMS Holdings, Third Prime, Global Founders Capital, Lightbank and BlockFi. www.gamergains.com

• Florida Food Products, a portfolio company of Ardian, acquired T-Bev, a Eugene, Ore.-based maker of teas and tea extracts, from Swander Pace Capital. www.t-bev.com

• Fourshore Partners acquired Celtic Capital, a midmarket asset-based lender. www.celticcapital.com

• GI Partners agreed to buy GTY Technology (Nasdaq: GTYH), a Boston-based provider of cloud software to the public sector, for around $400m, or $6.30 per share (123% premium over Thursday’s closing price). http://axios.link/nX7V

• Industrial Opportunity Partners acquired Raven Engineered Films, a Sioux Falls, S.D.-based maker of polymer film and sheeting solutions, from CNH Industrial (NYSE: CNHI). www.ravenefd.com

• Olympus Partners bought Austin, Texas-based Planet Fitness franchisee Excel Fitness Holdings. http://axios.link/VjXW

🚑 Patient Square Capital committed to invest up to $300m to form Enevate Sciences, which will invest in therapeutics companies and be led by James Boylan (ex-president and head of investment banking at SVB Leerink). www.enevatesciences.com

🚑 Bausch + Lomb is the only company expected to go public on a U.S. exchange this week, with what could be the year's second-largest IPO. http://axios.link/8Gdw

Source: Giphy

• Victory Acquisition, a media, sports and entertainment SPAC led by James Lites (exec chair of the Dallas Stars), withdrew registration for its $250m IPO. Directors included Sammy Hagar and Roger Staubach. http://axios.link/k9cL

🚑 Peak Bio, a Chinese biotech focused on oncology and inflammation, agreed to go public at an implied $278m valuation via Ignyte Acquisition Corp. (Nasdaq: IGNY). http://axios.link/TBKV

• EQT hired Moelis & Co. to find a buyer for Wash Multifamily Laundry Systems, a Torrance, Calif.-based apartment building laundry machine operator that could fetch around $2b, per Bloomberg. http://axios.link/Vst1

✈️ Spirit Airlines (NYSE: SAVE) rejected an unsolicited $3.6b takeover offer from JetBlue (Nasdaq: JBLU), citing antitrust concerns, and instead will continue pursuing its merger with fellow low-cost carrier Frontier (Nasdaq: ULCC). http://axios.link/kBfk

⚡ Abu Dhabi National Oil agreed to buy a 25% stake in Austrian chemicals manufacturer Borealis from Mubadala Investment Co. http://axios.link/sUQy

• G-III Apparel Group (Nasdaq: GIII) will pay $210m to buy the remaining 81% stake of the Karl Lagerfeld fashion brand. http://axios.link/7VCA

⚡ Galp Energia, Portugal's largest oil company, is seeking a buyer for its Angola upstream operations, per Bloomberg. http://axios.link/wCML

• Keisei Electric Railway, a Japanese high-speed rail operator, will buy smaller rival Shin-Keisei for $228m. http://axios.link/ZmoQ

• MGM Resorts International (NYSE: MGM) offered to buy Swedish online casino gaming company LeoVegas (STO: LEO) for around $607m, or 61 crowns per share (44.2% premium over Friday's price). http://axios.link/Lqc4

⚡ Mike Cannon-Brookes, co-CEO of Atlassian, acquired an 11.28% stake in Australia's AGL Energy (ASX: AGL), which in March rejected his A$5.4b takeover offer. He also said he plans to vote against the company's plan to split. http://axios.link/7zXQ

🚑 Jumpstart Capital, a Nashville-based health tech VC firm, is raising $120m for its second fund, per an SEC filing.

• Sheva, an Israeli seed firm co-founded by former NBA player Omri Casspi and ex-Global Founders Capital partner David Citron, raised $50m for its debut fund.

• Go deeper: April's stock skid