Scott Shleifer stepping down a blow but in India Tiger zinda hai, say founders and VCs

According to data from Venture Intelligence, Tiger Global has been part of 228 deals worth $21 billion along with other investors in Indian startups since 2015. It has funded 38 of 103 unicorns in the country.

While the stepping down of Tiger Global’s private equity head Scott Shleifer could deal a blow to the technology investor’s plans in India in the short term, the firm’s bet on the country’s startups is expected to remain alive and kicking over the longer term, according to its portfolio founders and venture capital peers.

The New York-based investment firm was an early backer of e-commerce major Flipkart and also made gains of over $3.5 billion on the bet. Over the years, Tiger Global has emerged as one of the largest investors in Indian tech startups, alongside the likes of SoftBank, Prosus and Temasek, and counts unicorns such as Spinny, Pharmeasy, Moglix, Urban Company, ShareChat, Dream11 and Infra.Market as its portfolio companies, among several others.

“It is too early to say it will impact India market. I think the larger question will be Tiger Global’s focus on the PE/VC space, since Scott was handling that. I think they were going slow overall in PE/VC. If Tiger Global continues to build out its PE/VC business, India should remain on its radar screen. They have a solid brand here and  that’s not easy to build,” said Vikram Chachra, founding partner of venture capital (VC) firm 8i Ventures.

According to data from Venture Intelligence, Tiger Global has been part of 228 deals worth $21 billion along with other investors in Indian startups since 2015. It has funded 38 of 103 unicorns in the country.

“Ideally and logically nothing should change materially after Scott leaves because here institution power will take over and it wasn’t just him who called the shots. The ongoing conversations and deals – all of them should transition without any friction,” said a Tiger Global-backed founder who did not want to be named.

“We’ve hardly interacted with Scott, would’ve met him just twice for less than 5 minutes in total but it’s understandable, he can’t give his time to all 1,000 companies,” he added.

Tiger Global: The back story

Shleifer's reign comes to an end after he has spent over two decades at the investing giant. He is stepping back from the top role for two primary reasons: Shleifer has opted to stay put in Florida, where has a mansion worth $110 million, instead of working from Tiger Global's office in New York, Chase Coleman, founder of Tiger Global wrote. Simply put, Shleifer was uninterested in working from the office.

Tiger Global's lackluster performance was also another reason why Shleifer is stepping down, as per multiple reports. Tiger Global was also reworking its strategy and focusing on more Series A deals in India, a key market for several VC firms, as reported earlier.

"It’s purely performance led, I would think. And the advisor role possibly helps save them from a keyman trigger," a founder who has raised several millions from Tiger Global, said.

One of a kind

However, some have a bit more fond memories of Shleifer’s reign.

"Scott was very accessible to founders here and would pick up the phone to talk to them. It is unclear what the path will be as Tiger has set up a committee that will be overseen by Chase Coleman," a top tech executive said to Moneycontrol.

“With Lee Fixel and Scott Shleifer departing from Tiger Global, India may fall off the radar. Scott was someone who bet big on India alongside Lee Fixel,” he added.

Fixel was a star investor in Tiger’s stable who was responsible for its bet on Flipkart. He had joined the firm in 2006 and subsequently became its head of private equity. Fixel left in 2019 to start a VC firm of his own, giving a momentary jolt to Tiger’s ambitions in India. But, Shleifer was quick to go back to business as usual in the country.

“This (Shleifer's departure) is a big loss in a meaningful way. It is not good for the startup ecosystem. Over a 2-4 year period, Scott has invested over ten billion dollars. He is someone who believed that the tech ecosystem here will grow with the broader Indian economy. He never used to hesitate from writing $50-$100 million cheques at the early stage of build up. Lee Fixel and he were unique individuals and leaders,” a top executive of a unicorn said to Moneycontrol.

When the post-pandemic tech boom was at its peak in 2021, the investor had made 28 bets on Indian internet companies over the course of a single year. And, the biggest differentiator on its calling card that attracted founders was said to be the firm’s comfort in handing out large valuations at ease.

For instance, when investing app Groww was raising funds in early 2021, investors were offering it a valuation of about $500 million, doubling in six months. Tiger could have offered a valuation of $600-700 million and still won the deal. But, it went the extra mile and invested $83 million at billion dollar valuation, catapulting Groww to unicorn status- private firms valued at a billion dollars or more.

Of course, its dealmaking streak has softened over the past two years as lossmaking tech companies have become less attractive amid a tightening of interest rates. While it made 28 investments in 2021 in India, the number of deals decreased to 5 the next year. In the current year, it has made no bets on the country’s startups.

“Signs of stress in the hedge fund industry in general. It also affirms the practice that you are as good as your last investment in this industry, and that is good given the rewards are high for being right. I remain optimistic that the industry will come out of it stronger - there will be some negotiations between LPs, GPs and other stakeholders to strengthen this,” said Ashish Kumar, general partner at VC firm Fundamentum.

With inputs from Chandra Srikanth, Deepsekhar Choudhury, Bhavya Dilipkumar and Tushar Goenka.