OpenAI’s venture investors are still fighting to reinstate Sam Altman as the CEO, my colleague Jessica Mathews reported late Monday. The reason? OpenAI may become worthless with Altman moving to Microsoft, and the VCs want to preserve their investment. Some of the venture firms are also weighing a lawsuit against OpenAI’s board of directors.

Personally, I don’t blame the VCs for resorting to legal action, if it does go there. OpenAI’s board shocked nearly everyone late Friday when it ousted Altman as CEO and pushed Greg Brockman, who was president and chairman, to step down from the board. Brockman later resigned. (Both Altman and Brockman are cofounders of OpenAI.)

The departures caused a fierce outcry on X and a slew of press coverage, most of which wasn’t favorable. Over the weekend, OpenAI’s board was in talks to bring Altman back. That didn’t work. Microsoft announced late Sunday or early Monday, depending on your time zone, that Altman and Brockman would be joining the technology giant to lead a new AI research team. Then, on Monday, nearly all of OpenAI’s more than 700 employees threatened to leave the company if the current board didn’t resign and reinstate Altman as CEO and Brockman as president, according to a letter.

With all the twists and turns of the OpenAI saga, we still don’t know why Altman was fired. The board initially said he “was not consistently candid in his communications” and provided no further insight. One VC ­told Fortune, and this is just musing, that the Altman firing was possibly orchestrated to get OpenAI’s unusual corporate structure overturned. The firm was valued at $86 billion in October, but Altman doesn’t have any true equity, the VC noted. “He might have some shadow equity,” they added. OpenAI did not return messages for comment. Altman could not be reached.

There are no real winners so far among the chaos. Microsoft has invested over $13 billion in OpenAI and owns 49% of the company, the New York Times reported. News of Altman’s move to Microsoft on Monday caused shares to rise nearly 2%, closing at an all-time high of $377.44.

But it’s not exactly a win for the tech behemoth, wrote Alyson Shontell, editor-in-chief of Fortune. “Microsoft is now also on the hook for building up a new AI research organization under Altman and Brockman within its ranks. Even worse, some of Microsoft’s investment in OpenAI could end up a sunk cost as Altman loyalists defect from the startup, which may be unable to fulfill its contractual obligations to Microsoft,” she wrote.

The potential losers are much more obvious: the venture capitalists who poured hundreds of millions into OpenAI—namely Khosla Ventures, Sequoia, and Thrive Capital. The VCs may have been prepared to fund a new company led by Altman and Brockman, but they’re unable to do that if the pair sticks with Microsoft. “Without those two at the helm at OpenAI, the VCs will likely lack confidence in the remaining team—and could see their investment go to zero,” Shontell wrote.

A lot remains unclear at this time, but one thing has come into focus: The OpenAI chaos isn’t ending any time soon.

SCOOP. On Sunday, I reported that Petal Card, the fintech backed by Peter Thiel’s Valar Ventures, was seeking a buyer as doubts loom about its survival. The startup was valued at $800 million in 2022.

See you tomorrow,

Luisa Beltran
Twitter: @LuisaRBeltran
Email: luisa.beltran@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.

VENTURE DEALS

- Ingenious.Build, a Nashville, Tenn.-based developer of project management software for real estate and construction companies, raised $37 million in Series A funding. Morpheus Ventures, Navitas Capital, and Koch Real Estate Investments led the round and were joined by American Family Ventures, JLL Spark Global Ventures, and Crow Holdings.

- Medmo, a New York City-based medical imaging company, raised $9 million in funding. Lerer Hippeau led the round and was joined by Jerusalem Venture Partners, C2 Ventures, Stone IsraVentures, and others.

- Munch, a Tel Aviv, Israel-based AI tool designed to autonomously cut long video content into marketable clips for social media, raised $7.2 million in seed funding. A* Capital led the round and was joined by Liquid2, Cardumen Capital, and Reimagine Ventures.

- Vizcab, a Lyon, France-based platform designed to help those in the construction industry develop net-zero building strategies, raised €5 million ($5.5 million) in Series A funding. KOMPAS VC led the round and was joined by Rise PropTech Fund, Cemex Ventures, and others. 

- Quoherent, a Huntsville, Ala.-based developer of quantum computing processors, raised $4.7 million in seed funding. Morpheus Ventures led the round and were joined by Draper Associates, Khosla Ventures, and Alpha Edison.

- Reboxed, a London, U.K.-based provider of refurbished and pre-owned tech devices, raised £1.6 million ($2 million) in seed funding from ACF Investors. 

- Scalestack, a New York City-based data enrichment, prioritization & activation platform for revenue operations departments, raised $1 million in funding from Ripple Ventures, Forum Ventures, Flyer One Ventures, Founders Network Fund, and others.

EXITS

- Arlington Capital Partners acquired Exostar, a Herndon, Va.-based platform designed to help companies securely and efficiently digitize, from Thoma Bravo. Financial terms were not disclosed. 

- Greenbriar Equity Group recapitalized VIVE Collision, an Albany, N.Y.-based collision repair operator, from Garnett Station Partners.

- SK Capital Partners acquired J&K Ingredients, a Paterson, N.J.-based manufacturer of bakery, food and beverage, and pet food ingredients, from CORE Industrial Partners. 

OTHER

- Aonic acquired nDreams, a Hampshire, U.K.-based virtual reality game developer, for approximately $110 million. 

- Ackerly Partners acquired a minority stake in Leeds United, a Leeds, U.K.-based soccer club, per Bloomberg. Financial terms were not disclosed.

- Enartis acquired a majority stake in WINEGRID, an Ílhavo, Portugal-based developer of wine production technology designed to improve winery efficiencies and wine quality. Financial terms were not disclosed.

- McDonald’s Corporation agreed to acquire a minority stake in its China business from The Carlyle Group. Financial terms were not disclosed. 

FUNDS + FUNDS OF FUNDS

- SEVA, a Brooklyn, N.Y.-based growth equity firm, raised $85 million in its first fund focused on customer-centric technology companies.