It's no secret that limited partners in VC funds are frustrated by a lack of distributions. Now we have some data to back up their complaints, and it's brutal.

By the numbers: Nearly one-third of VC funds raised in 2017 — over six years ago — had yet to return any money to their investors through the end of March 2024, according to Carta.

• The numbers are even worse for 2018-vintage funds, as is to be expected for newer vehicles, with just 57% having made distributions.
• It's as if a refusal of startups to go public — enabled by VCs who prefer to be "founder friendly" than fiduciaries — has had consequences.

Zoom in: There are lots of explanations/rationalizations for this putrid performance:

1. The Biden administration is at fault, through heightened antitrust scrutiny that's tamped down on M&A activity.

• It's certainly true that some Big Tech buyers are being more circumspect, but U.S. M&A activity in 2024 is up 29% year-to-date, per LSEG. This includes a 39% bump for "high technology." The only major U.S. sector with a significant year-over-year decrease is health care.
• And this doesn't have anything to do with the dearth of IPOs.

2. VC funds are recycling, rather than distributing.

• This may be true, although its impact seems belied by other Carta data showing median TVPI of 2017 funds at 1.78x and of 2018 funds at 1.37x.
• If recycling if being done to boost paper returns, but they still remain below 2x after seven years, is it working?
• For context, the S&P 500 is up 147% since the beginning of 2017 and up 106% since the beginning of 2018.

3. LPs are being impatient.

• Lots of these funds are probably early-stage, and 2017-vintages could have committed a lot of capital in 2020 or even 2021. In other words, they shouldn't have distributions.
• Admittedly, Carta didn't break down this data set by stage focus. So maybe we give a pass to some of these funds, although my memory of 2017-2018 was that VCs were signing checks almost faster than they would be printed.

The bottom line: VCs overpaid for lots of companies before the pandemic, and a group of distribution deadbeats still haven't come to grips with it.

• The only real question is if LPs will hold them to account, leading to a significant industry shakeout.

Source: Giphy

Alimentation Couche-Tard (TSX: ATD), the Canadian owner of Circle K convenience stores, made a preliminary takeover offer for 7-Eleven owner Seven & i (Tokyo: 3382).

Why it's the BFD: This would be the largest foreign takeover of a Japanese company, and also would create one of the world's largest convenience store operator with around 10,000 locations.

By the numbers: Seven & i had around a $31 billion market cap prior to the news, which sent shares up more than 20%.

The bottom line: "Foreign takeovers of Japanese companies are extremely rare, but recent changes in guidelines for M&A proposals, and activist investors pushing companies to boost value — including at Seven & i — could boost the odds of a deal that would create a global convenience-store behemoth." — Reed Stevenson, Bloomberg

🚑 Neptune Medical, a Menlo Park, Calif., developer of GI devices and robotics, raised $97m in Series D funding from firms like Sonder Capital and Olympus Corp. of the Americas. It also spun out a new subsidiary called Jupiter Endovascular. axios.link/46Phvdx

• Fabric Cryptography, a Santa Clara, Calif., maker of cryptography hardware, raised $33m in Series A funding. Blockchain Capital and 1kx co-led, and were joined by Offchain Labs, Polygon, and Matter Labs. fabriccryptography.com

• Consensus, a developer of a search engine for scholarly work and health topics, raised $11m in Series A funding. Union Square Ventures led, and was joined by Draper Associates, Nat Friedman, and Daniel Gross. axios.link/4dNfNeR

• Waza, a provider of payment solutions for African businesses, raised $3m from YC, Byld Ventures, Norrsken Africa, Heirloom VC, Plug and Play Tech Center. It also secured $5m in debt. axios.link/4dyHZTe

• Apheros, a Swiss developer of solutions for cooling data centers, raised $1.85m led by Founderful. apheros.ch

🚑 Audax Private Equity agreed to buy the clinical services business of Avantor (NYSE: AVTR) for $650m. axios.link/4fLem2n

• AutoScout24, a Germany-based online car marketplace owned by Hellman & Friedman, agreed to buy Canadian rival Trader Corp. from Thoma Bravo. axios.link/3X892yL

⚡ Continuum Green Energy, an Indian renewable energy group, raised $150m from Just Climate. continuumenergy.in

• Emerald Bay Risk Solutions, backed by Bain Capital, acquired Mainsail Insurance Co., a provider of P&C insurance coverage. emeraldbayrisk.com

• Guardian Restoration Partners, a portfolio company of Alpine Investors, acquired Quick Dry Restoration (Boise, Idaho) and Spartan Emergency Water Removal (Fredericksburg, Va.). guardianrestoration.com

• Koch Equity Development agreed to buy the Iconectiv, a Bridgewater, N.J.-based call-routing business, from Ericsson for $1b. axios.link/3AC2nE2

⚡ NOVA Infrastructure acquired UGE International, a community solar and battery storage business. axios.link/4cuBX4r

• Warren Equity Partners acquired MoboTrex, a Davenport, Iowa-based provider of traffic and mobility solutions to government agencies. mobotrex.com

The only major U.S. IPO expected this week is WeRide, a Chinese autonomous driving startup that's seeking to raise $110m at a $5.7b market cap.

• FACT II Acquisition, a financial services SPAC led by ex-Credit Suisse execs, filed for a $175m IPO. axios.link/3M9nnEN

• HCM II Acquisition, a SPAC formed by Hoondis Capital Management, raised $200m in its IPO. axios.link/3Xt6gVm

• Advanced Micro Devices (Nasdaq: AMD) agreed to buy New Jersey-based server maker ZT Systems for $4.9b in cash and stock. axios.link/3ySui23

• Altor Solutions, a subsidiary of Compass Diversified (NYSE: CODI), agreed to buy Lifoam Industries, a Greer, S.C., provider of cold-chain packaging solutions, for $137m in cash. lifoam.com

• Bitwise Asset Management, a VC-backed crypto ETF company, agreed to buy London's ETC Group. axios.link/3McjDCz

⚡ Empresas Copec of Chile agreed to pay €275m for the Gasib liquefied natural gas business in Spain and Portugal from Cepsa. axios.link/3MbOBe2

🚑 Nova Biomedical, a Waltham, Mass., maker of devices for blood testing and analysis, is in talks with PE and strategic buyers for a sale that could fetch more than $2b, per Bloomberg. axios.link/4fRKdye

🚑 Repligen (Nasdaq: RGEN) offered to buy Maravai LifeSciences (Nasdaq: MRVI), a San Diego-based maker of capping reagents with around a $2.6b market cap, per Reuters. axios.link/4dOGZdi

• HarbourVest Partners raised $15.1b for its 11th private equity secondaries fund. harvourvest.com

• Radical Ventures, a Toronto-based VC firm focused on AI, raised nearly US$800m for a new fund. axios.link/4dN6kEf

• Michael Iuliano joined Kinderhook Industries as general counsel and chief compliance officer. He previously was with Saluda Grade Asset Management. kinderhook.com

• Paul Hastings promoted Jordan Goldman to of counsel in the law firm's emerging growth companies group. axios.link/3SU36Hk

• Avineet Punhani joined GoldenTree Asset Management as a principal on the private credit team. He previously was a managing director with PNC Financial Services. axios.link/3Mi6bgh

🚑 Bernhard Sakmann and Justin Reed are leaving Evercore to join Leerink Partners, per Bloomberg. axios.link/3YJQypA

The stock markets have soared during President Biden's administration, with the S&P 500 rising 44.2% since his inauguration.

• Don't expect to hear too much about that during this week's Democratic National Convention. Not only because it's always a bit sophomoric to link presidential actions to stock market performance, but also because the braggart can so easily get egg on their face.
• Instead, expect most economic track record talk to focus on job and GDP growth.

Speaking of the DNC: If you're in Chicago, please join us at Axios House for events featuring Valerie Jarrett, Gina Raimondo, Rep. Jim Clyburn (D-S.C.), New York Gov. Kathy Hochul, UAW president Shawn Fain & more.

• See the full schedule and RSVP.