After an 18-month hiatus amid a prolonged funding winter, Tiger Global is back on the prowl, with new investments in startups such as Captain Fresh, Infra.Market, EatClub, and Meesho.
The New York-based hedge fund, however, has changed its investing style in India, the world’s third-largest startup ecosystem — it is now spending more time with portfolio companies and founders.
“I did not expect Tiger to get so involved honestly,” Souvik Sengupta, co-founder of IPO-bound Infra.market, a real estate and construction materials marketplace, told Moneycontrol. “Tiger is also one of the most flexible funds I have worked with." Sengupta said interactions with the team had gone up dramatically over the past months.
“Earlier Tiger had a 'We've funded you, we'll come back later' approach but now there's more hand- holding and increased involvement on a monthly basis. The team proactively asks us for data sets each month, something that they never did earlier,” the founder of another Tiger Global portfolio company said on condition of anonymity.
Along with a closer look at the numbers, the investor is also making its key fund managers like Deep Verma spend more time in India where company executives and founders are getting more in person face time.
“The periodic interactions with Deep are a positive surprise because they never happened earlier (when Scott Shleifer, the former head of private investing, was at the helm).
“Deep, along with his team, now visits India at least once every quarter because of which we spend more time with them. They're taking a closer look at our profitability projections, monthly numbers, timelines and also connect us with their portfolio companies for synergies or give other contacts,” he added.
Verma has been with Tiger Global since 2012 and has risen through the ranks to now lead India and Southeast Asia (SEA) from Singapore, said founders who interact with him regularly.
Internally, Verma enjoys the same confidence that Griffin Schroeder, Partner at Tiger Global, does. Schroeder emerged as a key name when Shleifer stepped down and is credited with leading deals in large startups like PhonePe in India.
Tiger Global did not respond to Moneycontrol’s queries.
Show me exits
In line with its selective investment approach, Tiger Global is now more inclined to doubling down on an existing portfolio company only if it can provide an exit in the near term.
"For growth stage investments, Tiger is pretty clear now that it wants to invest or double down on older bets only if there's visibility on a liquidity event in six-eight months. A company that is closer to an IPO or an M&A, is more likely to raise money from Tiger during its current phase," a second founder, who recently raised money from Tiger Global and is preparing to go public, told Moneycontrol. The founder didn’t wish to be identified.
Exits are important for private equity (PE) and venture capital (VC) funds as it helps them return borrowed capital to their sponsors. A successful and timely payout would ensure that these sponsors, or limited partners (LPs), return and reinvest capital when PE/VC firms are preparing to raise a new fund.
Tiger, however, is in no rush to sell assets it acquired in the recent years.
“I offered Tiger an exit while raising my latest round but they are in no hurry. They want to see us grow. They’re not keen on taking some chips off the table, at least not from companies that are in the early to mid-stage phase like us,” a third founder, who closed a recent round of funding, said.
Smaller cheques
Tiger Global, like other marquee investors, is also tweaking its strategy to back promising founders, even if it means cutting smaller cheques.
“Tiger has also shown willingness to cut smaller cheques for us when we raise a new round, something it was hesitant to do earlier. It won’t do the $5-6 million rounds but has expressed comfort to do the $30-40 million kind of rounds,” a fourth founder told Moneycontrol.
“2021/22 was more about Tiger writing a large number of cheques but 2024 is all about portfolio management plus a few smaller cheques,” the founder added.
The approach is new and Tiger is not alone. Even Japan-based SoftBank is nearing a $30 million investment deal with health tech startup Ultrahuman.
Funds from both sides of the Atlantic are scouting for world-class founders who will deliver exponential returns. And if those happen to be raising less than $100 million, as against the fund’s preference of over $100 million, then so be it.
“We’re still looking for the next Harsha (Swiggy chief Sriharsha Majety, the next Sahil (Delhivery chief Sahil Barua) ...we’re looking hard and that’s why we haven’t started reinvesting yet. Today, we’re at a $5.5-trillion market cap on the National Stock Exchange (NSE), 25 percent of that should be tech in five years from now. For that we need a lot of that (founder) pipeline to come through,” Sumer Juneja, Managing Partner Head of EMEA and India Investing, SoftBank Vision Fund, said at the Moneycontrol Startup Conclave in August.
SoftBank and Tiger Global are two of the most prolific global investors in India. While the Japanese investor has pumped in around $15 billion, so far, the American giant has invested close to $7 billion in India.
With exits on the horizon, Tiger Global’s earlier playbook of pouring capital into high-growth, high-risk companies is being replaced with a more measured hands-on approach. Whether this is a temporary change that will evolve with economic cycles or will set the ball rolling for a differentiated strategy and which playbook will yield better results remains to be seen.
During the funding frenzy, Tiger Global backed 48 companies across 63 deals in 2021. In the following year, when central banks across the world started to tighten interest rates, the deal momentum slowed to 53 deals across 50 companies, data from Venture Intelligence showed.
In 2023, Tiger Global backed just seven companies across seven rounds. This year, the investment approach has evolved and it has backed just four startups, according to seven founders who spoke to Moneycontrol.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
