Tiger Global Management has started off the year on a tech dealmaking spree, closing one of the largest venture funds ever at $6.7 billion. The New York-based firm is now seeking to raise $10 billion for its next tech venture fund.
The company’s pace of dealmaking has caught attention. Tiger Global has led, co-led, or participated in a record number of large tech financing rounds. Within the span of about 120 days in 2021 so far, Tiger has participated in over 100 investment rounds that have raised a total of $22.2 billion.
Tiger Global Seeks $3.75 Billion, Raises $6.65 Billion
For its latest fund, Tiger wrote a letter to investors in January saying it was raising a $3.75 billion fund. High investor interest resulted in Tiger raising $6.65 billion for this fund, nearly double the targeted amount. Tiger’s thirteenth fund is titled XIV for superstitious reasons. it will continue to focus on backing high growth private and public companies in the technology and consumer sectors. Its investors include mostly a mix of Tiger’s own employees, sovereign wealth funds, endowments, pension funds, and other institutional holders.
It is now seeking to raise a $10 billion tech fund. If successful, it would be one of the largest raises by an independent fund manager that takes minority stakes in technology startups. SoftBank’s Vision Fund, the venture capital arm of the Japanese conglomerate SoftBank, is currently the world’s largest fund focusing on tech. It has raised over $100 billion.
Investments in Asia
Many of Tiger Global Management’s recent wins have been in China and India. Its $200 million investment in Chinese e-commerce company JD.com netted the firm a $5 billion return. Similarly, Tiger netted an over $1 billion return on its investment in Meituan, a Chinese shopping platform, following Meituan’s 2018 IPO.
Some of Tiger’s biggest wins in India include its investments in Flipkart, Ola, Delhivery, Quikr, and other unicorn startups. Lee Fixel, a Tiger executive, led the firm’s dealmaking in India. The investment firm’s stake in Indian e-commerce company Flipkart resulted in a $3 billion gain. Flipkart was sold to Walmart in 2018.
A number of megahit investments have also been in the U.S. At the time of Peloton’s 2019 IPO, Tiger had a 20% stake in the fitness company best known for its stationary exercise bikes. Tiger Global made a $1 billion profit from its Peloton stake. On Spotify’s first day of trading on the New York Stock Exchange, Tiger owned 7.2% of the music company’s shares. That stake, which was worth around $700 million before it went public through a direct listing, turned into nearly $2 billion following Spotify’s public debut.
On the M&A front, Tiger has backed some startups that have engaged in high-profile M&A deals. Tiger was a lead investor in the late-stage financing rounds of Kustomer, a platform that manages customer relations across channels. Kustomer was acquired by Facebook for $1 billion in 2020. Tiger Global also participated in the late-stage financing rounds of Credit Karma. The personal finance startup was acquired by Intuit in 2020 in an $8.1 billion deal.
Tiger Global Has Faced Setbacks
Despite its large proportion of successful tech and consumer industry investments, it has experienced some notable disappointments. An early investor in e-cigarette maker Juul, Tiger Global subsequently slashed its valuation. Juul was valued at $38 billion in December 2018. One year later, Tiger lowered Juul’s valuation to $19 billion. Juul faced a number of regulatory setbacks, including investigations by the Food and Drug Administration and Federal Trade Commission as well as a criminal probe in California over allegations of deceptive marketing practices. The company, once a Silicon Valley darling, had to pull many of its flavors from the U.S. market.
Tiger Global Management was founded in 2001 by Chase Coleman as an offshoot of the prominent hedge fund Tiger Management. Julian Robertson founded the hedge fund Tiger Management in 1980. Robertson closed the hedge fund in 2000, and entrusted Chase Coleman with over $25 million to put into various investments. Coleman decided to focus his investments on the technology and consumer sectors. Tiger Global Management initially focused on investing in publicly traded equities, but later expanded to private equity investments. Scott Shleifer, who formerly worked at the private equity firm Blackstone, co-founded the private equity practice in 2003.
In a letter to investors at the beginning of the year, Tiger stated: “The opportunity set across public and private markets in our core focus areas of consumer, enterprise, and financial technology in the U.S., China, and India is very large relative to the amount of capital we manage and evolving at a rate that is often hard to comprehend.”
Tiger Global Management’s winning streak in tech is likely to continue as it is able to attract investors to its funds. Tiger Global is already trying to accelerate the timeline to close its next growth equity fund, which it seeking $10 billion for, as the firm simultaneously continues investing in new startups at a record pace.