Limited partner fears about distributions being delayed into 2026 are beginning to be realized, and now a new worry has emerged.

• What if lots of deals get done later this year, but for the wrong reasons?

Private equity and venture capital funds are sitting on around $1.7 trillion of dry powder, the term for capital that's been committed but not yet invested, per data from Cambridge Associates and PitchBook.

• This includes nearly $140 billion raised in 2019 or 2020, which is of particular note because funds typically have just five years to build their portfolios. And another $200 million from 2021, some of which also could hit the end of its investment period this calendar year.

One option for GPs sitting on lots of dry powder would be to cut fund sizes by letting LPs out of a portion of their commitments. But GPs promised the kids a trip to Europe and themselves a new Porsche, and they're nothing if not men and women of their word. So fund size cuts aren't happening.

• Another solution would be to ask for investment period extensions, which can work out for both sides — depending on how the fees get structured. And that is something that's happening, at least anecdotally, according to Cambridge Associates private investments head Andrea Auerbach.

Then there's Door No. 3, which is that GPs will start putting the money to work for the sake of putting money to work.

• To be clear, this is an LP fear that hasn't yet been realized. Capital calls still remain pretty light, which isn't too surprising given the recent market turmoil.
• But it's also a scenario that I've heard from numerous sources this week.

But wait, says rhetorical reader, why would GPs make bad deals? Won't that hurt their carry?

• First, GPs wouldn't intentionally make bad deals. They'd just be more liberal with what makes a good deal.
• As for the carry, that is indeed a risk. But the more present danger is to lose the flow of management fees, and you can't begin investing a new fund while the prior one remains active.

The bottom line: There's still the chance that "Liberation Day" becomes a historical footnote, paving a path for the quality dealmaking boom so many had expected. There's also a chance that LPs will be asked to write checks stained with their tears.

Source: Giphy

Intel has reversed its decision to spin out Intel Capital, one of Silicon Valley's oldest and most active corporate venture funds.

Why it's the BFD: Comments from new Intel CEO Lip Bu-Tan, himself a former venture capitalist, suggest that a major secondary sale is coming.

• "We have made the decision ... to work with the team to monetize our existing portfolio, while being more selective on new investments that support the strategy we need to get our balance sheet healthy and start the process of deleveraging," Tan said on an earnings call.

The bottom line: This feels like the beginning of the end for Intel Capital, which was founded in 1991 and has invested more than $20 billion in over 1,800 startups.

• Team members must already be polishing résumés, after having been dangled the economics of an independent fund. Let alone with a much more restrictive balance sheet.

• Butterfly Effect (dba Manus AI), a Chinese AI agent developer, raised $75m at a $500m valuation led by Benchmark, per Bloomberg. axios.link/4iBAVqD

🚑 Avidicure, a Dutch cancer biotech focused on multifunctional antibody modality, raised $50m in seed funding. EQT Life Sciences led, joined by Kurma Partners, BioGeneration Ventures, BOM, Curie Capital, and V-Bio Ventures. axios.link/3GDEvmv

• Fora, a New York-based travel agent startup, raised $40m in Series C funding from Thrive Capital, Insight Partners, Forerunner Ventures and Heartcore Capital. axios.link/4jvNuVy

• Push Security, a Boston-based identity threat detection startup, raised $30m in Series B funding. Redpoint Ventures led, joined by Datadog Ventures. axios.link/3S5eS0s

• Listen Labs, an SF-based autonomous user interview tool, raised $27m led by Sequoia Capital. axios.link/3S5eMWE

• Reducto, an SF-based startup that helps LLMs read documents, raised $24.5m in Series A funding. Benchmark led, joined by insiders First Round Capital, YC, and BoxGroup. axios.link/42uvKE4

• SquareX, a Palo Alto, Calif.-based browser detection and response startup, raised $20m in Series A funding. SYN Ventures led, joined by Peak XV Partners. axios.link/44eyTct

• Theo, a New York-based trading infrastructure startup, raised $20m led by Hack VC and Anthos Capital, with participation from Manifold Trading, Mirana Ventures, Metalayer Ventures. axios.link/4438kXw

🌎 RepAir Carbon, an Israeli carbon capture startup, raised $15m in Series A extension funding. Taranis Carbon Ventures and Extantia Capital led, joined by Ormat Technologies and Repsol. axios.link/4438jmq

• ALT Sports Data, a San Diego-based betting data startup, raised $5m in seed funding led by Relay Ventures and Eberg Capital, with participation from Motley Fool Ventures and Scrum Ventures. axios.link/3Ex7LLh

🚑 Nuclivision, a Belgian PET imaging startup, raised €5m led by LUMO Labs and Heran Partners. axios.link/3GqH3EH

• DBR77 Robotics, a Polish industrial tech startup, raised €3.5m in seed funding led by ff Venture Capital. axios.link/42IZqMu

🍷 WineFi, a British wine investment platform, raised £1.5m in seed funding led by CoterieHoldings. axios.link/42stBZu

• AEA Investors bought a majority stake in Splash Car Wash, which has more than 65 locations in the Northeast, from Palladin Consumer Retail Partners. splashcarwashes.com

👖 Authentic Brands Group is considering a rival takeover bid for clothing brand Guess (NYSE: GES), which previously received a $677m take-private bid from WHP Global, per Bloomberg. ABG backers include CVC Capital Partners, General Atlantic, HPS Investment Partners, and Leonard Green & Partners. axios.link/3GqMVO6

• Commercial Bakeries, a Canadian portfolio company of Graham Partners, acquired local peer Hollandia Bakeries. axios.link/4cWHgeT

• Hydroflex, a German cleanroom systems supplier owned by The Riverside Co., acquired Dastex, a cleanroom contamination control company. hydroflex.com

• I Squared Capital agreed to buy the U.S. school bus unit of Mobico (LSE: LCG) for $608m. axios.link/4jtIaSC

• Peak Capital Partners invested in Kaira Technologies, a Canadian digital financial coaching company. kaira.ai

• PSG invested in Glasswall, a London-based file protection company. glasswall.com

🚑 Reveleer, a Glendale, Calif., health insurance risk management SaaS backed by Oak HC/FT, acquired Novillus, a Portland, Ore., workflow platform for health plans. axios.link/3Gj19ke

• WestView Capital Partners made a growth equity investment in Hoist Global Tech Solutions, an IFS systems integrator and services provider. axios.link/3Rvw13g

• Crane Harbor Acquisition, a SPAC led by HEPCO Capital Management execs, raised $200m in an upsized IPO. axios.link/4hUzGmb

• Inflection Point Acquisition III, a SPAC formed by Kingstown Capital, raised $220m in its IPO. axios.link/3V3oCug

• New Providence Acquisition III, a consumer SPAC led by former soft drink execs, raised $261m in its IPO. axios.link/4i5z9xo

🚑 GTCR is exploring a sale of a minority stake in Klick Health, a Toronto-based digital marketing agency for health care that could be valued at between $2b and $3b, per Bloomberg. axios.link/3YMU4OW

⚡ Morgan Stanley Infrastructure Partners is weighing a sale of its majority stake in Permian pipelines project Brazos Midstream II, which could fetch more than $2b (including debt), per Reuters. axios.link/4jKJ1Or

• Ant Group agreed to buy a control stake in retail brokerage Bright Smart (HK: 1428) for around US$362m. axios.link/3Epvop5

• Axonic Capital, a New York-based MBS investor with $6.3b in AUM, is weighing the sale of a control stake, per Bloomberg. axios.link/44G2z29

• Eastern Bankshares (Nasdaq: EBC) agreed to buy fellow regional lender HarborOne Bancorp (Nasdaq: HONE) for $490m in cash and stock. axios.link/42RfEU1

🎧 EU antitrust regulators will probe Universal Music Group's $775m deal for indie music publisher and services firm Downtown Music, per the FT. axios.link/4jHoFFU

• IFX Payments agreed to buy Argentex Group (LSE: AGFX), a U.K. currency management firm in the midst of liquidity troubles. axios.link/44E8lkU

🚑 Merck of Germany is in talks to buy SpringWorks Therapeutics (Nasdaq: SWTX) for upwards of $3.5b, per Bloomberg. axios.link/3GqWLQ1

• S&P Global (NYSE: SPGI) agreed to acquire the Automatic Identification System data services business of Orbcomm. axios.link/4483Kap

🎧 Tencent Music Entertainment Group is in talks to buy Chinese podcasting platform Ximalaya for $2.4b, per Bloomberg. Ximalaya, whose backers include Trustbridge Partners, in 2021 registered for a U.S. IPO but then withdrew. axios.link/4jqnn27

• Toyota Motor (NYSE: TM) chairman Akio Toyoda proposed to buy supplier Toyota Industries (Tokyo: 6201) for around $42 billion, per Reuters. Toyoda only holds a 1% stake, with the report saying much of the record-breaking buyout would be financed by local banks. axios.link/4jqVTtp

🚑 Clearlake Capital Group is extending fundraising for its eighth flagship fund to November, having so far only secured $13b of its $15b target, per Bloomberg. axios.link/44Ddx8E

• G Squared is raising up to $2b for its next direct VC secondaries fund, per Axios Pro. axios.link/3RwacRd

• I Squared Capital is raising $200m infrastructure tech growth equity fund, per Axios Pro. axios.link/42tcLJX

• CenterOak Partners promoted Carrie Hamilton to partner of biz dev and IR. axios.link/44FnK4k

• Morgan Cheatham joined Breyer Capital as a partner and head of health care and life sciences. He previously was with Bessemer Venture Partners. axios.link/3GjwiUr

• Jonathan Goldstein was promoted to managing partner of Americas private capital at exec search firm Heidrick & Struggles. axios.link/42L91Cj

• Granite Creek Capital Partners promoted Ken Kruger and Andrew Kearney to principals. granitecreek.com

• Panoramic, a Scottish growth equity firm, promoted David Atkinson to partner. axios.link/4cKF3Da