That’s exactly what has taken place over the last fiscal year at the University of Michigan, whose endowment has its hands in many of Silicon Valley’s most storied venture capital funds. The endowment cut back its new investments in venture capital and private equity by more than 40% in the 12 months ending in June 2023, according to public documents reviewed by Fortune as well as records obtained by a Freedom of Information Act Request.

The endowment, which oversaw $17.9 billion in assets as of June 2023, reported that it had committed more than $1 billion of capital to private funds during its 2022 fiscal year. By June of this year, that number dropped almost in half, with the endowment committing only $580 million in new capital to private equity and venture capital funds. In addition, the university said in its most recent report that it had severed relationships with nine private fund managers in its 2023 fiscal year, versus only four the year prior. A spokesperson for the University of Michigan didn’t respond to a request for comment before press time.

The University of Michigan is an important limited partner in the venture capital ecosystem, in particular, as it has its hands in some of Silicon Valley’s most storied and well-known names, including Sequoia Capital, Andreessen Horowitz, Accel, General Catalyst, and Y Combinator, according to documents Fortune requested under freedom of information laws. 

To be sure, the University of Michigan is still very saturated in venture capital and private equity and maintains it is still committed to the asset class in its annual report. As of June 2023, approximately 40.9% of the endowment’s portfolio was invested in venture capital and PE funds.

Even so, the endowment’s portfolio adjustments underscore how increasingly competitive the fundraising market has become. As I reported this summer, this is the worst time for first-time fund managers to raise a fund in a decade—particularly as rising interest rates have made other asset classes more appealing to limited partners and as the path to exit has thinned, meaning there’s less capital going back to LPs to reinvest in new funds. However not all limited partners are dialing things back. CalPERS, one of the venture capital market’s most important investors, has doubled down as other peers get cold feet or restrategize.

The University of Michigan reported a one-year annualized investment return of 0.7% for its PE and VC investments, compared to an industry benchmark of -3.4%.

“While performance of venture capital can be potentially volatile in the short term, it has been one of the best performing areas of investment over the long term,” the endowment’s latest annual report said, and it listed a 20-year annualized rate of return of 16.7% for that asset class.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
Submit a deal for the Term Sheet newsletter here.

Joe Abrams curated the deals section of today’s newsletter.

VENTURE DEALS

- Totus Medicines, an Emeryville, Calif.-based drug discovery company, raised $66 million Series B funding. DCVC Bio led the round and was joined by North Pond Ventures and others.

- Kapital, a Mexico City, Mexico-based banking and operations platform for enterprises, raised $40 million in Series B funding. Tribe Capital led the round and was joined by Cervin Ventures, Tru Arrow, MS&AD Ventures, Alumni Ventures, and others.  

- Distributional, a remote-based platform for testing AI models, raised $11 million in seed funding. Andreessen Horowitz led the round and was joined by Operator Stack, Point72 Ventures, SV Angel, and others. 

PRIVATE EQUITY

- Atairos Management agreed to acquire a minority stake in V Sports, a London, U.K.-based owner of football clubs. Financial terms were not disclosed.

- Le Sueur Incorporated, a portfolio of Delos Capital, acquired Craft Pattern and Mold, a Montrose, Minn.-based metal and plastics component manufacturer. Financial terms were not disclosed.

- RMA Companies, backed by OceanSound Partners, acquired Rone Engineering, a Dallas, Texas-based geotechnical engineering, materials testing, and environmental services firm. Financial terms were not disclosed. 

- TREND Health Partners, a portfolio company of Lone View Capital, acquired Advent Health Partners, a Nashville, Tenn.-based provider of AI-powered software designed to streamline medical record review for revenue cycle and payment integrity processes. Financial terms were not disclosed. 

EXITS

- Webster Bank agreed to acquire Ametros, a Wilmington, Mass.-based management services provider for medical settlements, from Long Ridge Equity Partners. Financial terms were not disclosed.

OTHER

- Abu Dhabi National Oil agreed to acquire a 50% stake in OCI NV, an Amsterdam, Netherlands-based producer and distributor of nitrogen, methanol, and hydrogen products and solutions, for $3.6 billion. Abu Dhabi National Oil will own 86.2% of the company after the deal closes. 

- Chobani acquired La Colombe, a Philadelphia, Penn.-based coffee roaster and café operator, for $900 million.

IPOS 

- Fractyl Health, a Lexington, Mass.-based developer of type 2 diabetes and obesity therapies, filed to go public. Mithril Capital Management, General Catalyst, Bessemer Venture Partners, and One Palmer Square Associates back the company.

FUNDS + FUNDS OF FUNDS

- ARTIS Ventures, a San Francisco-based venture capital firm, raised $200 million for its fourth fund focused on data, software, AI, machine learning, and deep learning companies working with human health and well-being. 

- Climactic, a San Francisco and New York City-based venture capital fund, raised $65 million for its first fund focused on companies looking to make the mobility and enterprise sectors more sustainable.

PEOPLE

- Kiko Ventures, a London, U.K.-based venture capital firm, added Arielle Schacter, Marius Evers, and Paul Eisenberg to their investing team. Formerly, Schacter was with Barclays, Evers was with Trade Republic, and Eiesnberg was with Planet A Ventures.