Venture capitalists are inserting a record number of "pay to play" provisions into term sheets, according to new data from law firm Cooley.

Why it matters: This is a sharp-elbowed reminder that VCs are facing performance pressure, and that startups are having a tougher time getting funded.

Jargon watch: "Pay to play" provisions also may be known as "cram down" clauses, and basically are designed to benefit new investors at the expense of existing shareholders who don't want to invest additional capital.

• The critical view is that this is unfair to insiders who took a chance when the company's prospects were more specious, but who've either lost faith or no longer have money to spend (including early employees or VC funds without adequate reserves).
• The more charitable view is that such rounds are for companies that need money — not those that just want to bolster balance sheets — and that the new investors are vital to the company's future success. In short: Get on board or get out.

By the numbers: Cooley reports that 8.7% of all Q2 deals included such language.

• That's highest mark since Cooley began tracking in 2014, and the first time since Q1 2017 that it topped 8%.

Zoom in: "Pay to play" historically has been concentrated in later-stage deals, regularly topping double-digit percentage points (including last year), but that wasn't the case in Q2 2024.

• Instead, the largest percentage was in Series A rounds (13.7%).
• The main explanation is that most "pay to play" last quarter was for life sciences startups, where funding rounds often include milestone-based investments. In short, there's a discount included for investors who agree to particulate in the second tranche.
• A second explanation is that some later-stage companies have recapped, and thus raised "Series A" funding even though it may actually be a fourth or fifth funding round.

Rural Healthcare Group, a Nashville, Tenn., portfolio company of private equity firm Kinderhook Industries, agreed to buy the Steward physicians group for $245 million.

Why it's the BFD: Steward and its bankrupt hospitals are ground zero for the political battle over private equity's involvement in health-care services.

Flashback: Steward previously agreed to sell the physicians network to Optum, a unit of UnitedHealth, but the deal later collapsed.

By the numbers: The Kinderhook transaction, which is subject to bankruptcy court approval, covers around 5,000 physicians in ten states who treat around 40,000 patients.

The bottom line: This would separate Steward's doctors from the hospitals they once bought from Cerberus Capital Management, thus creating uncertainty about the future of that relationship. Not sure if you've visited a hospital lately, but doctors are usually a key feature.

🚑 PayZen, an SF provider of health care financing tools, raised $32m in Series B funding. NEA led, and was joined by insiders 7WireVentures, Signal Fire and Viola Ventures. It also secured a $200m warehouse credit facility from Viola Credit. axios.link/4cnw1KD

• Guidewheel, an SF maker of factory ops software, raised $31m in Series B funding. Decarbonization Partners led, and was joined by Ecolab, Rethink Impact, GSBackers and insiders Greycroft and Breakthrough Energy Ventures. guidewheel.com

🚑 MD Ally, a New York-based virtual triage startup, raised $14m in Series A funding, per Axios Pro. Frist Cressey Ventures led, and was joined by Techstars, Seae Ventures, Red & Blue Ventures, and Alumni Ventures. axios.link/3AihhPI

• FRVR, a Lisbon, Portugal-based gaming distribution platform, raised $12.7m. Iberis Capital led, and was joined by Indico Capital Partners, Lince Capital, and Hiro Capital. axios.link/4dDF233

• Blitzscale Technology, the parent of retail tech providers WMall and ShopDeck, raised $7.85m led by Bessemer Venture. axios.link/4cmo0ph

🚑 Kano, a Cambridge, Mass., developer of ssDNA for gene insertions, raised $7.1m in seed funding co-led by The Engine Ventures and Vsquared Ventures. Kano is a biotech pioneering ssDNA for gene insertions. kanotherapeutics.com

🚑 4baseCare, an Indian precision oncology startup, raised $6m in Series A funding led by Yali Capital. axios.link/4ctry9c

• Boostly, a Lehi, Utah, marketing platform for restaurants, raised $5.6m in seed funding. Trestle Partners led, and were joined by Relish Works, Singularity Capital, and YC. axios.link/3YGE0iP

• Ragie.ai, an SF startup that helps devs build AI applications connected to their own data , raised $5.5m in seed funding. Craft Ventures led, and was joined by Valor, Saga VC, and Chapter One. ragie.ai

• Collo, a Finnish provider of IoT analyzers for industrial liquid processes, raised €5m. SEB Greentech VC and FORWARD.one co-led, and were joined by Scale Capital. axios.link/4fLzKo3

🌎 Clearly, a London trucking decarbonization startup, raised $4.3m in seed funding. Pace Ventures and Nine Realms co-led, and were joined by Mobilion, Next Gear, and M1720. axios.link/3M2eugb

• Heatmap, a data analytics tool for e-commerce websites, raised $4m in seed funding. Vine Ventures led, and was joined by Hawke Ventures, Pari Passu Venture Partners, and Mu Ventures. axios.link/4dj0D1b

• Reforged Labs, a video ad creation automation platform for games, raised $3.9m in seed funding led by DCM. axios.link/3YJg7aq

• Cosine, a British "human reasoning lab," raised $2.5m from SOMA and Uphonest. axios.link/3SMaS5K

🚑 Farmako, an Indian medicine delivery startup, raised $1.6m from 535 West Capital, Bayhouse Capital, Goodwater Capital, Unpopular Ventures, and Jude Gomila. axios.link/3YESvDC

• GoWit, an Irvine, Calif., retail media advertising platform, raised $1.3m from Formus Capital, APY Ventures, Mindvest, and DCP. axios.link/46GSalK

🚑 Bain Capital is frontrunner for a 60% stake in Indian cancer hospital chain HCG, which is being sold by CVC Capital Partners, per Bloomberg. axios.link/46OcCBw

🚑 Carlyle agreed to buy the Vantive kidney-care business of Baxter (NYSE: BAX) for $3.8b. axios.link/3AfKU4b

• CVC Capital Partners acquired around a 50% stake in Epicor, an Austin, Texas, industry-specific business software firm, from Clayton, Dubilier & Rice. Earlier reports suggested up to a $9b valuation, with CD&R holding the remaining position.

• H.I.G. Capital acquired Axis, a British provider of property maintenance services, from John Hayes. axios.link/3M1kOEC

🚑 Lightyear Capital completed a strategic investment in CuraLinc Healthcare, a Chicago provider of employee assistance, student, and workforce mental health programs. curalinc.com

• Orora (ASX: ORA), an Australian packaging company, rejected a A$3.4b takeover offer from Lone Star Funds. axios.link/4dZ8KA3

• Pexco, a specialty plastics processor owned by Odyssey Investment Partners, acquired Yorba Linda, Calif.-based Precise Aerospace Manufacturing. pexco.com

• Vista Equity Partners agreed to buy Jaggaer, a Morrisville, N.C., supply chain software firm, from Cinven. jaggaer.com

⚡ HMH Holding, a Houston provider of drilling equipment and services co-owned by Baker Hughes and Akastor, filed for a $100m IPO. It plans to list on the Nasdaq (HMHW), and reports $25m of net income on $401m in revenue for the first half of 2024. axios.link/3yCBtLI

• Cantor Equity Partners, a new SPAC formed by Cantor Fitzgerald, raised $100m in its IPO. axios.link/3X0mTXL

• Sage Homes, a portfolio company of Blackstone, sold 3,000 homes to U.K. pension fund Universities Superannuation Scheme. axios.link/4dfIFfU

• Viessmann Group of Germany agreed to buy KPS Global, a Fort Worth, Texas maker of walk-in coolers and freezers, from D Cubed Group. axios.link/3X56Hos

• Bellway (LSE: BWY) ended its £700m efforts to buy U.K. homebuilder Crest Nicholson (LSE: CRST). axios.link/3yF1jyJ

• Krafton, a listed Korean gaming firm, acquired Tango Gameworks from Microsoft (Nasdaq: MSFT). axios.link/4ckXqNb

• WSP Global (TSX: WSP) agreed to buy Power Engineers, a Hailey, Idaho, engineering and environmental consulting firm, for C$2.44b. axios.link/46MtoAH

• Antler, a Singaporean VC firm, raised $72m for its second Southeast Asia fund. axios.link/3WMw5xE