| Over 300 organizations rely on The Information for exclusive insights into public and private companies, including in-depth analysis of the ways in which tech moves markets. Click here to contact our corporate and enterprise team to learn more. Welcome back! Some of the tech leaders traveling to the Middle East this week might be able to get travel tips on the region from investors at General Atlantic. The New York–based growth equity investor opened offices in Riyadh and Abu Dhabi last year to make more investments in local startups after getting cash from the region's vast oil coffers. A recent investor update I obtained from General Atlantic, which manages more than $100 billion, shows why firms need to go to extra lengths to please investors these days. Last year, General Atlantic distributed back to limited partners just $3.9 billion overall, the lowest amount in the past five years and 40% short of its target. From two funds it raised in 2019 and 2021, it only returned about 7% of the capital as of the end of last year, the document shows. The historic dearth of initial public offerings appears to be taking a particular toll on General Atlantic's world of growth equity, which grabs minority stakes in relatively mature, private companies that are expected to go public in the near future. General Atlantic, a family office turned private capital megafirm, made its name in Silicon Valley with high-profile investments in Airbnb, Uber and Alibaba. But its current portfolio didn't tally a single major IPO last year, facing delays from potentially high-value listings like Shein and ByteDance. (It got some good news today, as banking startup Chime filed to go public. General Atlantic was the fourth-largest outside shareholder, its IPO filing showed.) On paper, General Atlantic's 2021 fund has held up notably better than some flops from that frothy year, like Blackstone's growth equity fund and Tiger Global Management's massive startup fund, which are both stained with red ink. General Atlantic reported to investors that its fund was up an annualized 4%, net of fees, at the end of last year. (Some of its largest private markups include brand management retailer Authentic Brands Group, which owns Reebok and Champion, and Indian payments firm PhonePe, documents show.) The report of last year's lack of liquidity comes at an awkward time for General Atlantic, which is raising money for its next fund. The firm has said it would close the $8 billion fund at the end of this year. It'll be hard to go back to the same investors who put in money the last few times but haven't gotten much back. Those numbers would also make it difficult for the firm to go public itself, which it had been preparing to do in order to compete with larger inve like Ares Management, TPG and Apollo Global Management. The lack of acquisitions and IPOs is, of course, a sour industry trend. My colleague Miles Kruppa wrote earlier this month that venture capital and growth equity funds had returned a smaller percentage of capital back to investors than they had during even the dot-com bubble and financial crisis of 2008. This helps explain a parallel trend of firms edging closer to the Middle East sovereign wealth funds that might care less than endowments and pension funds about getting cash back relatively quickly. TPG, a rival to General Atlantic,has also opened up offices in the region, and U.K. growth equity investor Permira plans to do so. VC megafirms like Andreessen Horowitz and General Catalyst have developed strong ties there as well. Of course, General Atlantic's pitch to investors is that now is the best time to put in money. The firm made investments last year in well-known firms like artificial intelligence video startup Runway and consumer startups Vuori and Athletic Brewing Co. It said 82% of the businesses in its portfolio were profitable last year, up from three-quarters a year prior, and sales across its companies grew on average 29%. And the firm said its next fund is "well positioned to benefit from the strongest entry point in growth investing over the last decade," with private valuations largely discounted, particularly in emerging markets. If General Atlantic is right, that would help the firm make more friends, in the Middle East and elsewhere. Three of the most lucrative capital raises so far this year have come from startups that are nearly a decade old, now hitting their stride and enjoying life in the private markets. I'm talking about software firm Rippling, weapons manufacturer Anduril and data labeling startup Scale AI, which have all seen significant valuation step-ups as they age. That combination is likely to increase chatter about long-awaited, blockbuster IPOs in the next couple years. But they have work to do if that's a goal. All three lack the kind of board of directors they'll need to go public. Usually, a public company needs five to seven board members, with at least half the directors independent. (What independence means is somewhat complicated, but it generally excludes large shareholders.) Anduril, which is in the process of closing a new round at $28 billion, has the most vacancies to fill. It has only three of its co-founders on its board, even as it has raised money from established money managers like Sands Capital and BlackRock and won large Defense Department contracts. Scale AI, which is finishing a secondary share sale at a $25 billion mark, has gotten a head start by placing an outsider—Plaid co-founder William Hockey—on its board, in addition to its CEO, Alexandr Wang, and two venture capitalists from Accel and Index Ventures. Hockey, however, is one of Wang's close personal friends, which could strain the definition of independence. Rippling, a human relations software maker founded in 2016, completed a new financing at a $16.8 billion valuation last week. It counts only CEO Parker Conrad and venture capitalists from Kleiner Perkins and Founders Fund on its board. Conrad has had bad experiences with boards in the past—but he'll need a bigger one if he eventually wants to take Rippling public. Thank you for reading Dealmaker! We'd love your feedback, ideas and tips: cory@theinformation.com on Signal at 1 (561) 818 3915 and natasha@theinformation.com and on Signal at 1 (925) 271 0912. | 
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