Tiger Global, a of the biggest winners in the tech bull market, 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 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, partner Alex Cook said recently. Tiger Global, to the founders, sources say. familiar with these conversations.
Cook met several founders during his visit to Bengaluru earlier this month, offering advice and allaying market concerns over the company’s recent performance. Cook also assured that Tiger Global is sitting on dry powder and will continue to support the “top 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 has 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 exhausted its current fund, and in the same month, journalist Eric Newcomer reported that Tiger was looking to raise a $1 billion crossover fund.
Cook told the founders it was still a bit 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 rein in big backers as they scramble to assess the stock market rout that has sharply reversed much of the bull run’s gains 13 years old.
Still, Tiger Global’s decision is significant because it wrote 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. Indian startups raised $6.9 billion in the quarter that ended in June, compared to $10.3 billion in the period between January and March this year, according to news platform Tracxn .
(Some of the transactions announced in the prior quarter were agreed to and completed as early as January, so second-quarter numbers do not accurately reflect business activity in the quarter, many investors said.)
Some investors – reportedly including Coatue – have warned that tech stocks could fall further and more painful days could be ahead for startups.
Tightening valuations have also trickled down to startups at every stage, including those in the seed and Series A stages, according to several investors TechCrunch spoke to.
“We’re in a ‘sliding knife’ market and things have only partially caught on in older and older companies. For example, Series B/C fell 30-70%, but the price revision is inconsistent. Some companies have achieved high valuations over the past few months while others cannot raise 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 post. blog.
“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 standard). 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 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 last year, according to an analysis from TechCrunch.
Some investors have publicly criticized the growing interest of terminally ill investors in drafting seed and Series A deals, fearing it’s unclear whether these funds will continue to remain so keen on backing. start-ups when the market takes a turn.
Cook told the founders the company was optimistic about identifying and supporting early-stage startups and would continue to support such deals in the future, the sources said.
A spokesperson for Tiger Global declined to comment on Sunday evening.