Tiger Global, founded in 2001 by the visionary Chase Coleman, gradually emerged as one of the most prolific venture capital investors, providing crucial support to numerous start-ups over the past decade. Since the dawn of 2020, the firm has injected over $20 billion into private start-ups, amassing notable holdings in companies such as ByteDance, the parent company of the wildly popular TikTok, Shein, a fast-fashion retailer, and Stripe, an innovative payments start-up.
Image-: Financial Times
In a stunning turn of events, Tiger Global, the renowned investment firm based in New York and managing a whopping $60 billion in assets, finds itself entangled in a web of challenges in its latest endeavor to entice new investors. A recent report by a media platform reveals that after a strenuous eight-month period of fundraising, the firm has managed to secure a meager sum of just over $2 billion for its 16th private equity fund. This unfortunate outcome underscores the growing apprehension permeating the current market concerning the valuations of technology companies.
The saga of Tiger Global’s fundraising campaign for its new fund began back in October, with lofty aspirations of investing in undervalued companies. Although the campaign reached a significant milestone, known as the “first close,” in January, which typically indicates securing more than half of the targeted amount, the firm still finds itself woefully short of its ultimate goal of $6 billion. This discouraging revelation emerged from a securities filing released last Friday, prompting Tiger Global to continue its tireless quest for additional capital.
It is important to note that Tiger Global is not alone in its struggle to raise funds. Other notable venture capital firms, including the esteemed Insight Partners based in New York, have encountered similar challenges. Astonishingly, Insight Partners has managed to raise a mere $2 billion for a fund that initially aimed for a staggering $20 billion when it launched in June of the previous year. This disheartening information, divulged in the FT report, has led the firm to inform investors earlier this week that it is reducing its goal to a more modest $15 billion.
The collapse of venture capital funding in recent months has reached unprecedented levels, harkening back to a bygone era. The decline is fueled by investor aversion to illiquid private markets and the decreasing value of technology companies. In the first quarter alone, US venture firms witnessed a jaw-dropping 73 percent decline, raising a meager sum of nearly $12 billion compared to the same period the previous year.
With the odds stacked against them, Tiger Global is actively seeking investment from large institutional investors such as pension funds and sovereign wealth funds. They are also courting affluent individuals with substantial holdings at major brokerages like Morgan Stanley. Despite scaling back their ambitions from previous fundraising efforts, with a target amount less than half of what they raised for their last private equity fund in 2021, the firm’s progress has been disappointingly slower than anticipated. The primary culprits behind this sluggishness are investor caution and the diminishing valuations plaguing the market.
Tiger Global, founded in 2001 by the visionary Chase Coleman, gradually emerged as one of the most prolific venture capital investors, providing crucial support to numerous start-ups over the past decade. Since the dawn of 2020, the firm has injected over $20 billion into private start-ups, amassing notable holdings in companies such as ByteDance, the parent company of the wildly popular TikTok, Shein, a fast-fashion retailer, and Stripe, an innovative payments start-up.
During the extraordinary surge in tech valuations witnessed during the pandemic, Tiger Global shook up the venture capital landscape by offering substantial financial support to founders with fewer demands typically imposed by private equity groups. Notably, they displayed a more flexible approach, eschewing the need for board representation. However, the once fervent enthusiasm of Tiger Global, along with other major investors like SoftBank and Coatue, has waned in recent times, causing concern among start-up founders who were fortunate to have their backing. This decline in investor activity only exacerbates fears that start-ups may be forced to accept significantly lower valuations in order to secure much-needed funding.
As the arduous task of fundraising persists, Tiger Global and its counterparts in the venture capital sphere face the daunting challenge of navigating a market where the valuations of technology companies have become increasingly uncertain.
