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Tiger Global has been known to fuel a pandemic-era venture capital boom, investing heavily in a wide range of startups, and holding bidding wars on even unproven startups that have generated sky-high valuations. In 2021 alone, he backed the hedge fund 315 startup companiesAccording to PitchBook data.
And much of the venture capital industry He wasn’t happy about that, Even at that time. Near the end of 2021, the New York firm convinced its investors to commit $12.7 billion to its 15th venture fund (titled PIP 15) and then proceeded to invest the majority of that capital in more startups over the next several months. By May 2022, most of the money in this fund had already been fully invested, TechCrunch reported.
The company’s rapid investment strategy backfired. When the US Federal Reserve began raising interest rates rapidly in 2022, money became tighter and startup valuations dropped dramatically. As 2024 comes to an end, Tiger’s impact is still being felt as startups still grapple with not living up to their 2021 valuations.
And here’s the thing: A recent revelation by a Tiger investor shows that the investment performance of Tiger Global’s 15th fund is particularly poor, while several other funds of that era have delivered moderate returns.
As of June 30, 2024, paper losses at Tiger Global PIP 15 were more than 15%, according to a recent report. Report from the California State Teacher Retirement System (CalSTRS), a Tiger investor. Such huge losses place the fund in the bottom 10 percent of all investment funds raised in 2021, according to the latest reports. Pitchbook standards.
The company cut several investments it made to peak valuations, including email company Superhuman, which fell by 45%, search engine DuckDuckGo by 72%, and NFT marketplace OpenSea, by 94%. Bloomberg reported last year.
Tiger Global and CalSTRS declined to comment.
It’s true that a venture capital fund typically takes 10 years before the returns it generates are no longer just paper, but locked in through exits or other financial sales. So it’s possible that some of these companies will grow again and surpass their highs in 2021.
However, other 2021 legacy funds in the CalSTRS portfolio are performing significantly better. For example, Valor Equity Partners’ Fifth Fund securities (a measure known as internal rate of return) have a solid positive return of 15.7%, according to the report. Meanwhile, the 2021 funds from OakHC/FT, IVP and GGV (renamed this year as Notable Capital) returned 8.7%, 4.1% and 2.8%, respectively.
Although many large investors, including… Andreessen HorowitzWith General Catalyst and Kleiner Perkins raising significant funds this year, Tiger Global has scaled back its private markets ambitions in part because it has been unable to raise new capital as it had originally intended. Specifically, in October 2022, Tiger Global set out to raise $6 billion for its 16th private markets fund. The fund’s target was later revised to $5 billion. The Wall Street Journal reported.
But the New York company failed to raise even half of its new target. After raising capital for about 18 months, PIP 16 closed with just $2.2 billion in commitments earlier this year. Bloomberg reported. This is still a big box. But it cannot be compared to her previous ambitions.
However, Tiger Global still has significant financial resources to invest in startups. So far this year, the company has been involved in 24 venture capital deals, including Waymo, OpenAI, Scale AI and Wiz, according to PitchBook data.
Although it’s been nearly three years since the height of Tiger Global’s investment frenzy, it will take some time for the company to shake off its reputation as an investor who made too many wrong bets during the pandemic.
Some of the people who were responsible for the rapid venture capital investment strategy of that era are no longer with the company. John Curtius, a senior venture capital investor at Tiger Global, left the company in late 2022 to start his own firm, called Cedar Investment Management. According to reports, the company was looking to raise $1 billion. It is not yet clear whether the money has been raised or whether it has started making investments. Head of Venture Capital at Tiger Global Scott Schleifer also moved on To the position of advisor at the beginning of the year.
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