The carried interest tax loophole is like a movie monster.

• Politicians try to kill it every few years, only to get bloodied and then save themselves by letting it slink into the background.

The latest sequel arrived yesterday, with the White House telling House GOP leaders that it wants the loophole closed as part of upcoming tax negotiations.

• For the uninitiated, carried interest is the profit earned by private fund managers on others investors' capital.
• The loophole, which some Pro Rata readers argue isn't a loophole, is that carried interest gets taxed as a capital gain, rather than at the higher ordinary income rates. Even though it's essentially a fee for service, without fund manager capital at risk.

This isn't a new position for President Trump, who unsuccessfully advocated for the same thing in 2017, but it is nonetheless surprising.

• He didn't say a word about carried interest during the recent campaign, and since the election has turned Mar-a-Lago into Sand Hill Road East.
• Moreover, Trump's nominee to lead the Office of Personnel Management — Andreessen Horowitz's Scott Kupor — was an advocate for the carry status quo while chairing the National Venture Capital Association.

Industry trade groups like the NVCA and American Investment Council already have mobilized, suggesting that private investment would be curtailed were the tax treatment to change.

• Behind the scenes, expect these groups to tie themselves to real estate investors, who also can earn carried interest but who often get exempted from these proposals.
• That's what they did back in 2017, while also successfully proposing a slightly longer hold period to qualify for capital gains rates. Don't be surprised to see a similar fig leaf get floated.
• No word yet on who will be their legislative hero. In 2017 it was Rep. Kevin Brady (R-Texas), who chaired the House Ways and Means Committee. In 2022 it was Sen. Kyrsten Sinema (D-Ariz.). Neither are still in Congress.

The bull case for the loophole being finally closed is that Trump thus far has faced almost no GOP resistance to anything, and there will need to be at least some talking point pay-fors if the 2017 individual tax cuts get extended. Let alone if the corporate rate is lowered further and taxes on tips and Social Security get removed.

The bear case is that we've been through this many times before, under multiple administrations, and it always ends up the same way.

Look ahead: Don't be surprised if some VC and PE managers accelerate IPO or sale plans for certain portfolio companies, fearing a tax change that could take effect in 2026.

The bottom line: Here we go again.

TA Associates invested in Facts Global Energy, a London-based energy market intelligence firm that will acquire peer NexantECA.

Why it's the BFD: This comes at what could be an inflection point for industry research firms, as President Trump and Elon Musk have made a wide array of U.S. government data inaccessible through normal channels.

• For some private providers, this could be a boon as they seek to fill the void.
• Others, however, rely on government data to provide customers with actionable analysis.

The bottom line: FGE says that its research covers 130 countries for nearly 300 clients that include oil companies, financial traders, and utilities.

⚡ X-energy, a Rockville, Md., developer of small modular reactors, raised $200m in Series C extension funding from Segra Capital Management, Jane Street, Ares Management, and Emerson Collective. The round total is now $700m. x-energy.com

🌏 Tidal Vision, a Bellingham, Wash.-based green chemistry startup, raised $140m in Series B funding from Cambridge Cos SPG, Eni Next, Milliken & Co., Kirkbi Climate, Convent Capital, Swen Capital Partners, MBX Capital, and the Oman Investment Authority. axios.link/42LC9eG

• TrueFoundry, an SF-based AI deployment and scaling platform, raised $19m in Series A funding. Intel Capital led, and was joined by Jump Capital and insiders Eniac Ventures and Peak XV Partners. axios.link/4gujMxN

⚡Presto, an Oakland, Calif., developer of charging-management software for EV fleets, raised $15m in seed funding from USV, Congruent Ventures, Powerhouse Ventures, and Jetstream. axios.link/4aRaElB

⚡ Tyba, an SF-based energy storage optimization platform, raised $13.9m in Series A funding. Energize Capital led, and was joined by Pear VC, Mobilize Climate Capital, Borusan Ventures, Powerhouse, Wireframe, Virta, and Lorimer. axios.link/3WQYxPU

• Model ML, an AI fintech startup, raised $12m co-led by YC and LocalGlobe. axios.link/4aOyM8G

🚑 Miist Therapeutics, an Alameda, Calif.-based maker of inhalers for smoking cessation and migraine relief, raised a $7m in seed funding from Refactor Capital, 1517 Fund, and Freeflow Ventures. axios.link/4gvb42t

🌏 MacroCycle, a Cambridge, Mass., plastics upcycler, raised $6.5m in seed funding from Clean Energy Ventures, Volta Circle, Indorama Ventures, KDT Ventures, and Neotribe Ventures. axios.link/40Mc3p8

🌏 Modern Synthesis, a U.K. startup turning bacteria into textile fibers, raised $5.5m. Extantia Capital led, and was joined by Artesian and Collaborative Fund. axios.link/4123PdR

⚡ Podero, a Belgian DERMS developer, raised €5.5m in seed funding. Planet A Ventures led, and was joined by Systemiq Capital, Pale Blue Dot, and Push Ventures. axios.link/4hntaor

• TaxGPT, a virtual assistant for CPAs and tax firms, raised $4.6m in seed funding from Rebel Fund, Mangusta Capital, YC, Launch, iSeed Ventures, Converge Fund, TRAC AI/VC Unicorn Fund, Goodwater Genesis, and CRV. axios.link/42JPjbJ

• ZeroRisk, an Irish compliance and cyber risk management startup, raised $4m led by Elkstone. axios.link/4jPloVE

• INXY Payments, a Polish crypto processing platform, raised $3m led by Flashpoint VC. axios.link/4111W10

• Craveworthy Brands, a restaurant group run by ex-Jimmy John's CEO Gregg Majewski, is raising $40 million in growth equity, per Axios Pro. axios.link/4hP5ZD2

🔥 Blackstone agreed to buy AI Fire, a Long Beach, Calif.-based provider of fire safety equipment, from TruArc Partners for around $1.1b (including debt). axios.link/3WP074N

• In related news, Permira agreed to buy Pawtucket, R.I.-based Encore Fire Protection from LLCP for around $1.8b, per Bloomberg.

🚑 Bain Capital agreed to buy the pharma unit of Mitsubishi Chemical Group (Tokyo: 4188) for around $3.3b. axios.link/3EmmtnJ

🚑 General Catalyst completed its purchase of health system Summa Health, and is moving some of its health team members to Ohio, per Axios Pro. axios.link/4jOLb0d

• H.I.G. Capital agreed to buy Canadian IT and cloud computing firm Converge Technology Solutions (TSE: CTS) for C$1.3b, and will merge it with Florida-based portfolio company Mainline Information Systems. axios.link/4htIwaI

• Montagu acquired Multifonds, the fund accounting software business of Temenos (Swiss: TEMN) for around $400m. axios.link/3WPjk6s

• Turn/River Capital agreed to buy SolarWinds (NYSE: SWI), an Austin, Texas-based provider of observability and IT management software, for $4.4b (35% premium). axios.link/4hIbeEs

• Veritas Capital is in talks to buy Wall Street data provider Dun & Bradstreet (NYSE: DNB), which has around a $5.4b market cap, per Bloomberg. axios.link/4146DHf

🚑 Aardvark Therapeutics, a San Diego-based biotech focused on metabolic diseases, set IPO terms to 5.9m shares at $16-$18. It would have a $364m market cap, were it to price in the middle, and plans to list on the Nasdaq (AARD). The company raised $129m from backers like Decheng Capital (17%) and Vickers Venture Fund (17%). axios.link/4gu0mJt

• Titan America, the U.S. business of Belgian cement giant Titan Cement, raised $384m in its IPO. It priced at $16 per share (vs $15-$18 range), and will list on the NYSE (TTAM). axios.link/3PX0jLs

• Badger Meter (NYSE: BMI) acquired SmartCover, an Escondido, Calif., provider of sewer monitoring solutions, from XPV Water Partners for $185m in cash. smartcoversystems.com

• Ontario Teachers' Pension Plan hired Lazard to explore a sale of Mitratech, an Austin, Texas-based legal and compliance software firm that could fetch more than $4b, per Reuters. axios.link/4aNUUjm

• Paysafe (NYSE: PSFE), an online payments firm that went public via SPAC, is exploring a sale, per Bloomberg. The company is backed by Blackstone and CVC Capital Partners, and has a $1.2b market cap. axios.link/4hPMXN3

• BPER (Milan: EMII), Italy's fourth-largest bank, offered to buy Banca Popolare di Sondrio (Milan: BPSI) for €4.3b. axios.link/3Q7Idq9

⚡Cargill agreed to buy the 50% stake it doesn't already hold in SJC Bioenergia, a Brazilian biofuels company. axios.link/4gwx25h

• Legal & General LSE: LGEN) agreed to sell its U.S. protection business to Japanese insurer Meiji Yasuda for $2.3b in cash and a 5% stake in L&G. axios.link/3WOROFW

• o15 Capital Partners, an Atlanta-based firm focused on "undercapitalized companies and communities," raised $370m for a credit opportunities fund. o15.com

• CF Private Equity, an affiliate of Commonfund, raised $539m for its 15th venture fund-of-funds, $100m for its second venture direct fund, and $25m for a blockchain venture fund. cfprivateequity.com

• Alan Jones joined Wells Fargo as a managing director of investment banking, per Bloomberg. He previously was with Intermediate Capital Group. axios.link/4hLCUIS

• Joe Manchin, the former U.S. senator from West Virginia, joined Apollo Global Management as an adviser. He'll also join the board of Apollo insurance affiliate Athene Holding. axios.link/3CHPyty

The U.S. economy added 169,000 jobs in January, weaker than projected, while the unemployment rate fell to 4%.

• The Labor Department report also included annual revisions of the prior year's numbers, which showed around 590,000 fewer jobs added than initially disclosed. This was in line with expectations.
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