Tiger Global Management, one of the world’s largest technology investors, is aggressively eyeing early-stage investments in India as the New York-based hedge fund company remains bullish on younger tech startups in the country even as valuations of high-growth technology companies are dwindling elsewhere.
Shine Sameul, Associate at Tiger Global, based out of Bengaluru, is conducting meetings with a number of global early-stage investors, including Sequoia Capital India, Accel, and 3one4 Capital, among others, at least three people aware of the matter told Moneycontrol.
US-based Alex Cook, Partner at Tiger Global, has also come down with his team to meet early-stage investors at least a couple of times, they said, requesting anonymity.
Questions sent to Tiger Global, Sequoia Capital, Accel and 3one4 Capital remained unanswered.
To be sure, news agency Tech Crunch had reported in July how Cook had come down to India to meet some portfolio founders to offer them some advice and assuage them on ‘market conditions.’ The report also said that Tiger Global will be raising a new fund this year.
‘A few deals maybe finalised mid-Sept’
“Tiger is extremely bullish on early-stage tech companies in India. They believe the opportunity India offers for these companies is tremendous,” said a person aware of Tiger Global’s plans.
“They (Alex Cook and team) have already come down to Bengaluru a couple of times and their team is meeting investors to look at their portfolio. They want to look at early-stage companies of their co-investors like Sequoia and Accel, and are looking at potential investments. In mid-September, they are going to come again and finalise a few deals,” the person added.
The meetings are happening at a time when the hedge fund company is increasingly looking at investing in younger startups across the world as some of its late-stage bets are turning sour amidst a sharp correction in the valuations of technology companies.
Ups Series A bets in India more than three-fold
In May, Tiger Global had told its investors that more than half of the fund’s investments were in Series A or Series B rounds, typically the first or second big financings for private tech companies, from its newest and largest venture capital fund of nearly $13 billion it had raised in March.
Tiger Global had also upped its Series A bets in India more than three-fold this year. The hedge fund company had participated in Series A rounds of 10 companies, totalling $377.4 million in the first six months of 2022, against three companies in rounds totalling $75.7 million in the whole of 2021.
“Last year, Tiger Global would only participate in a $100 million round and probably nothing less than that,” said another person requesting anonymity.
“This year, from $100 million, the round sizes have come down to say $15-20 million. Their cheque sizes have also come down significantly compared to last year. I don’t know if they are really going aggressive on early-stage investments, but certainly they have started looking at early-stage investments, which wasn’t the case until last year,” the person added.
It can be noted that Tiger Global’s flagship fund ended the first half of the year, down 50 percent after fees, as the fund plummeted 63.6 percent in the second quarter of calendar year 2022 amid plunging shares of technology companies across the globe, according to a report by the Financial Times.
Tiger Global, which has had a significant exposure to many technology companies across the globe, blamed rising inflation for the stock rout. The hedge fund firm, which primarily is a long-only fund, is thus focusing more on early stages as late-stage investments have come under pressure amid rising interest rates.
Early-stage investments grow to $1.5 billion
Tiger Global’s optimism towards early-stage investments in India comes at a time when many early-stage investors, including some of the country’s largest and most aggressive, like Sequoia Capital, Accel, Elevation Capital, Westbridge Capital, Rocketship VC, Fireside Ventures and Matrix Partners, among others, have either raised or are in the process of raising their largest-ever India-focused funds.
Early-stage investments have already grown by a third in the first half of 2022 to $1.50 billion and with investors sitting on large India-focused funds, investments could go up further this year, compared to 2021, investors said.
“With Tiger Global coming in, the fight for term sheets could get intense at early stages,” said a third investor.
“At the same time, investors are getting cautious as tech valuations have corrected significantly across the world. So I expect money will chase only good companies and not all companies. But you could see valuations blowing up at some time,” the investor added.
Corroborating the investor’s comments, in a recent interview with Moneycontrol, Venky Harinarayan, co-founder of an early-stage investor Rocketship VC, had said he expects valuations at early stages to get inflated in the next 3-6 months, with large-stage investors sitting on a lot of dry powder.
Tiger Global has been one of India’s most aggressive tech investors and has minted close to 40 unicorns out of 105 in the country to date. This year, too, while many late-stage investors have gone slow on their investments in India, the hedge fund company has minted as many as five unicorns, out of 22 new that got minted.Tiger Global has backed unicorns across sectors in 2022, like neo-banking platform Open, gaming platform Games 24x7, small and medium enterprises lending marketplace Oxyzo Financial Services, Web 3.0 infrastructure Polygon and social commerce platform Dealshare.