Tiger Global to slow startup investment for two quarters, set up new fund later this year

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Tiger Global, one of the biggest winners of the tech bull market plans to slow down the pace of its startup investments for two quarters, the latest in a string of high-profile investors to become cautious as the market embraces the downturn.

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The New York-headquartered company, which according to PitchBook has invested in 361 deals in 2021, is assessing market conditions and plans to limit the number of new checks it writes through December, Tiger Global partner Alex Cook recently told the founders, according to sources. familiar with these conversations.

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Cook met with several of the founders during his visit to Bangalore earlier this month, offering advice and allaying market concerns about the firm’s recent results. Cook also assured that Tiger Global is sitting on dry powder and will continue to support “the best internet startups,” the sources said.

The firm is also set to raise a new fund later this year, according to sources, Cook said.

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2021 has been an eventful year for Tiger Global.

The firm, which manages more than $20 billion, has benefited from rising stock prices in tech companies like Zoom during the pandemic. But by May of this year, according to multiple reports. TechCrunch reported in May that Tiger almost exhausted his current fundand in the same month journalist Eric Newcomer informed that Tiger wanted to raise a $1 billion crossover fund.

Cook told the founders it’s still a little early to say how much capital Tiger Global can raise for its larger fund, the sources added, asking to remain anonymous as the conversations were private.

The slowdown in new investment comes as investors around the world sound alarm and slow down by making big supports as they struggle to appreciate the debacle in the stock market that has drastically wiped out much of the gains of a 13-year bull run.

However, according to PitchBook, Tiger Global’s move is significant as it wrote more checks last year than any other U.S. investor.

In recent months, investors around the world have become more selective and have lowered their valuations of private companies in many technology sectors around the world, including emerging markets. Indian startups raised $6.9 billion in the quarter ended June, up from $10.3 billion between January and March this year, according to analytics platform Tracxn.

(Some of the deals announced in the previous quarter were negotiated and completed as early as January, so the numbers for the second quarter do not accurately reflect deal activity for the quarter, according to many investors.)

Some investors, including reportedly Koatu — warned that tech stocks could fall even further and startups could expect more painful days.

The tightening of valuations has also affected startups at every stage, including the seed and Series A stages, according to several investors TechCrunch spoke with.

“We are in a sliding knife market and it has only partially spread to earlier and earlier companies. For example, the B/C series has fallen in price by 30-70%, but the revaluation is not constant. Some companies have received high ratings over the past few months, while others fail to raise funds at all. Series A valuations are down maybe 20-30% but should probably be down 50%+ from the highs,” wrote Elad Gil, a prolific early-stage investor. in a recent blog post.

“Series seed rounds have declined slightly but are likely to fall further as more Series A are overvalued more as investors aim for each round to be 2-3 times the valuation of the previous round (the traditional standard). Private technologies are being used at some stages where state technologies were closer to the beginning of this year. It will probably take another quarter or two to reach a new stable point in the startup market valuation, unless there is a recession or additional drops in the public market. 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 obvious changes to its strategy in 2020 and invested more than six dozen in early-stage deals last year, according to TechCrunch analysis.

Some investors have publicly criticized the growing late-stage investor interest in Seed and Series A deals, fearing it’s not clear if these funds will retain the same enthusiasm for backing younger firms when the market changes.

Cook told the founders that the firm is committed to identifying and supporting startups at an early stage and will continue to support such deals going forward, the sources said.

A spokesman for Tiger Global declined to comment on Sunday evening.

Credit: techcrunch.com /

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