Tiger Global, one of the tech bull market’s biggest winners, plans to slow the pace of its investment in startups for two quarters, the latest in a string of high-profile investors turning cautious as the market embraces a downturn.
The New York-based company — which invested in 361 deals in 2021, according to PitchBook — is evaluating market conditions and plans to limit the number of new checks to December, Tiger Global partner Alex Cook recently told the founders, according to sources familiar with that. conversations.
Cook met several founders during his visit to Bengaluru earlier this month, where he offered advice and allayed market concerns about the company’s recent performance. Cook also assured that Tiger Global is on dry powder and will continue to support the “best internet-enabled” startups, the sources said.
The company is also on track to raise a new fund later this year, Cook said, according to the sources.
Tiger Global had an eventful 2021.
The company, which manages more than $20 billion, benefited during the pandemic from the surge in the share prices of tech companies like Zoom. But by May this year, it had lost two-thirds of all the gains it had made in the equity funds since its inception in 2001, according to multiple reports† londonbusinessblog.com reported in May that Tiger had nearly exhausted its current fund, and in the same month, journalist Eric Newcomer . reported reported that Tiger was looking for a $1 billion crossover fund.
Cook told the founders it was a little early to say how much capital Tiger Global will be able to raise for its larger fund, the sources added, asking for anonymity as the talks were private.
The slowdown in new investment comes as investors worldwide sound the alarm and put the brakes on making major support as they rush to assess the stock market defeat that has left much of the gains from the 13-year bull run strong. reversed.
Still, Tiger Global’s move is significant because it wrote out more checks last year than any other US investor, according to PitchBook.
Investors around the world have become more selective in recent months, lowering the valuations of private companies in many technology sectors worldwide, including emerging markets. Indian startups raised $6.9 billion in the quarter ended June, up from $10.3 billion in the period between January and March this year, according to insight platform Tracxn.
(Some of the deals announced in the previous quarter were already negotiated and finalized in January, which is why the Q2 numbers don’t accurately reflect the quarter’s deal activity, many investors said.)
Some investors — including reportedly Coatue — have warned that tech stocks could fall further and more painful days could come for startups.
The tightening of valuations has also trickled down to startups at every stage, including those in the Seed and Series A stages of life, according to several investors londonbusinessblog.com spoke to.
“We are in a ‘sliding knife’ market and things have only partially grown into past and previous companies. For example, Series B/Cs are down 30-70%, but the price revision is inconsistent. Some companies have received high valuations in recent months, while others are unable to raise funds at all. Series A valuations may have fallen 20-30%, but should probably fall 50%+ from the highs,” wrote Elad Gil, a prolific novice investor, in a recent blog post†
“Series seed rounds have fallen somewhat, but are likely to fall further as more series A are repriced harder as investors aim for each round to be 2-3x the previous round’s valuation (the traditional default). Private tech is for some stages where public tech was early this year. It will likely take another quarter or two for startup market valuation to reach a new stable point barring a recession or additional public market dips. These things take some time to fully spread to all stages, founders and investors,” he added.
Previously best known for investing in growth and late-stage startups, Tiger Global made some marked changes to its strategy in 2020, making more than six dozen investments in early-stage deals last year, according to an analysis. from londonbusinessblog.com.
Some investors have publicly criticized the growing late-stage investor interest in writing Seed and Series A deals, citing concerns that it’s unclear whether those funds will remain as enthusiastic about supporting younger people. companies when the market takes a turn.
Cook told the founders that the company is optimistic about identifying and supporting early-stage startups and will continue to support such deals in the future, the sources said.
A Tiger Global spokesperson declined to comment Sunday night.