In the past two years, Tiger Global Management has upended the venture industry by investing in startups at an unprecedented pace. Along the way, the New York-based investor has racked up more unicorn portfolio companies—271 by our last count—than any other firm, edging out even Silicon Valley’s largest and most active VCs.
But with 2022 lurching into bear market territory and the firm’s hedge fund business—which invests in the public markets—reportedly losing 52 percent of its value this year amid a precipitous decline for technology stocks, the firm faces massive headwinds.
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One silver lining: Although Tiger’s hedge fund has taken a beating, its private equity practice—which invests in the startup ecosystem and last year overtook its hedge fund business in size—is proving much more resilient to the downturn, according to a source familiar with the firm.
In the past year, Tiger has grown its private practice further as the firm continues to invest heavily in startups, according to the source, and today that business represents around two-thirds of the value of the firm’s money under management.
Tiger Global declined to be interviewed for this article.
Tiger Global’s private equity business was worth around $64 billion at the end of 2021, according to a report in The Wall Street Journal. Since its start in 2003, the private equity business has invested a total of $34 billion and returned around $28 billion over all time, the source confirmed to Crunchbase News.
Of that $28 billion, more than $6 billion has been returned since the beginning of 2021.
As of the end of the first quarter in 2022, the firm has revised its private equity business down by around 9% to $58 billion, according to the same source. That amount does not include capital returned to investors. But it does include the value of its investments in private companies as well as those investments it holds for companies that have since gone public.
Those multiples are looking a lot stronger than on the hedge fund side.
Of course, if Tiger’s private companies find it difficult to raise funding at prior valuations, or if they fail, the value for these private assets would fall further.
But these companies also have time to grow in value over a longer time frame.
Tiger’s 2021 exit boom
Key to the relative resilience of Tiger’s startup investing practice this year is the streak of high-profile companies in its portfolio that went public last year.
In 2021, Tiger Global’s exits exploded with 29 portfolio companies going public, an unprecedented number for the firm. They include highfliers like Coinbase, which went public for a value of $86 billion, and Nubank, which went public at $41 billion, as well as Grab ($40 billion) and Roblox ($30 billion).
Tiger Global led funding rounds in Grab’s $65 million Series C in 2014, Nubank’s $35 million Series B in 2014, Coinbase’s $300 million Series E in 2018, and Roblox’s $150 million Series F in 2018.
By the time these companies went public, their valuations were significantly higher than when Tiger Global first invested.
Of course, today most of those stocks are far below their valuation at IPO. Coinbase, for example, has lost more than 80% of its value since going public. The one exception is Hong Kong-based SenseTime, which has traded up since its IPO.
But despite this year’s stock market crash, the market caps for many of Tiger’s startup investments are still above the private valuations at which the firm invested.
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Illustration: Dom Guzman
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Author: Gené Teare