Tiger Global to slow seed investments for two quarters, eyes new fund later this year
Tiger Global, one of the biggest winners in the tech bull market, plans to slow the pace of its startup investments for two quarters, the latest in a series of High profile investors turning cautious as market embraces a downturn.
The New York-based firm — which invested in 361 deals in 2021, according to PitchBook — is assessing market conditions and plans to limit the number of new checks it writes through December, Alex Cook said recently , a partner of Tiger Global, to the founders, according to sources familiar with the conversations.
Cook met several founders during his visit to Bangalore earlier this month, offering advice and allaying market concerns about the company's recent performance. Cook also assured that Tiger Global is sitting on dry powder and will continue to support "the best internet-connected startups", the sources said.
The company is also on track to raise new funds later this year, Cook said, according to the sources.
Tiger Global had an eventful 2021.
The company, which manages more than $20 billion, has benefited from rising stock prices of tech companies such as Zoom during the pandemic. But by May this year it had lost two-thirds of all gains made in equity funds since its inception in 2001, according to multiple reports. TechCrunch reported in May that Tiger had nearly depleted its current fund, and in the same month, journalist Eric Newcomer reported that Tiger was looking to raise a billion-dollar cross fund.
Cook told the founders it was still a little early to say how much capital Tiger Global will be able to raise for its larger fund, the sources added, requesting anonymity because the conversations were private.
The slowdown in new investment comes as investors around the world sound the alarm bells and put the brakes on gaining big support as they scramble to assess the stock market rout that has sharply undone much gains from the 13-year bull run.< /p>
Nevertheless, Tiger Global's decision is significant because it issued more checks than any other US investor last year, according to PitchBook.
Investors around the world have become more selective in recent months and have reduced the valuations of private companies in many technology sectors around the world, including emerging markets. According to news platform Tracxn, Indian startups raised $6.9 billion in the quarter that ended in June, compared to $10.3 billion in the January-March period of this year.
(Some of the transactions announced in the prior quarter were agreed to and completed as early as January, therefore the second quarter numbers do not accurately reflect business activity in the quarter, many investors said.)
Some investors, including Coatue, it seems, have warned that tech stocks could fall further and more painful days may lie ahead for startups.
The tightening in valuations has also impacted startups at every stage, including those in the seed and Series A stages, according to several investors TechCrunch spoke to.
"We are in a 'sliding knife' market and things have only partially caught on in older and older companies. For example, B/C series have dropped 30-70%, but the price review is inconsistent. Some companies have gotten high valuations over the past few months while others can't raise any funds at all. Series A valuations may have fallen 20-30%, but are likely to fall more than 50% from the highs,” Elad Gil, a prolific early-stage investor, wrote in a recent blog post.
“Series starting rounds have fallen, but will likely continue to fall as Series A revalues harder, as investors look for each round to be 2-3 times the value of the previous round (the traditional norm). Private tech is for some stages where public tech was earlier this year. Reaching a new stable point of startup market valuation should take another quarter or two, barring a recession or further decline in the public market. These things take a while to fully propagate through all stages, to founders and investors,” he added.
Previously best known for investing in growth-stage and late-stage startups, Tiger Global made apparent changes to its strategy in 2020 and made more than six dozen investments in early-stage deals l last year, according to a TechCrunch analysis.
Some investors have publicly criticized the advanced stage...
Tiger Global, one of the biggest winners in the tech bull market, plans to slow the pace of its startup investments for two quarters, the latest in a series of High profile investors turning cautious as market embraces a downturn.
The New York-based firm — which invested in 361 deals in 2021, according to PitchBook — is assessing market conditions and plans to limit the number of new checks it writes through December, Alex Cook said recently , a partner of Tiger Global, to the founders, according to sources familiar with the conversations.
Cook met several founders during his visit to Bangalore earlier this month, offering advice and allaying market concerns about the company's recent performance. Cook also assured that Tiger Global is sitting on dry powder and will continue to support "the best internet-connected startups", the sources said.
The company is also on track to raise new funds later this year, Cook said, according to the sources.
Tiger Global had an eventful 2021.
The company, which manages more than $20 billion, has benefited from rising stock prices of tech companies such as Zoom during the pandemic. But by May this year it had lost two-thirds of all gains made in equity funds since its inception in 2001, according to multiple reports. TechCrunch reported in May that Tiger had nearly depleted its current fund, and in the same month, journalist Eric Newcomer reported that Tiger was looking to raise a billion-dollar cross fund.
Cook told the founders it was still a little early to say how much capital Tiger Global will be able to raise for its larger fund, the sources added, requesting anonymity because the conversations were private.
The slowdown in new investment comes as investors around the world sound the alarm bells and put the brakes on gaining big support as they scramble to assess the stock market rout that has sharply undone much gains from the 13-year bull run.< /p>
Nevertheless, Tiger Global's decision is significant because it issued more checks than any other US investor last year, according to PitchBook.
Investors around the world have become more selective in recent months and have reduced the valuations of private companies in many technology sectors around the world, including emerging markets. According to news platform Tracxn, Indian startups raised $6.9 billion in the quarter that ended in June, compared to $10.3 billion in the January-March period of this year.
(Some of the transactions announced in the prior quarter were agreed to and completed as early as January, therefore the second quarter numbers do not accurately reflect business activity in the quarter, many investors said.)
Some investors, including Coatue, it seems, have warned that tech stocks could fall further and more painful days may lie ahead for startups.
The tightening in valuations has also impacted startups at every stage, including those in the seed and Series A stages, according to several investors TechCrunch spoke to.
"We are in a 'sliding knife' market and things have only partially caught on in older and older companies. For example, B/C series have dropped 30-70%, but the price review is inconsistent. Some companies have gotten high valuations over the past few months while others can't raise any funds at all. Series A valuations may have fallen 20-30%, but are likely to fall more than 50% from the highs,” Elad Gil, a prolific early-stage investor, wrote in a recent blog post.
“Series starting rounds have fallen, but will likely continue to fall as Series A revalues harder, as investors look for each round to be 2-3 times the value of the previous round (the traditional norm). Private tech is for some stages where public tech was earlier this year. Reaching a new stable point of startup market valuation should take another quarter or two, barring a recession or further decline in the public market. These things take a while to fully propagate through all stages, to founders and investors,” he added.
Previously best known for investing in growth-stage and late-stage startups, Tiger Global made apparent changes to its strategy in 2020 and made more than six dozen investments in early-stage deals l last year, according to a TechCrunch analysis.
Some investors have publicly criticized the advanced stage...
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