Tiger Global, which entered the Indian market back in 2005, has invested in a total of 21 unicorns, almost half of the billion-dollar startups that the country is home to. Further, of the total 10 startups crowned unicorn in 2021, Tiger Global continued to be the lead investor in five
Tiger Global Management, the New York-based investment firm known for its audacious bets in little-known companies, has led the funding rounds of three of the six startups that turned unicorn this week, resuming its aggressive pace of deal-making in India.
The hedge fund led investments in social media company Sharechat, messaging startup Gupshup, and investment platform Groww. In addition, Tiger also invested in the latest funding round of fintech startup Cred, which is among the six that earned the unicorn label in the first week of April.
Tiger Global, which entered the Indian market back in 2005, has invested in a total of 21 unicorns, almost half of the billion-dollar startups that the country is home to. Further, of the total 10 startups crowned unicorn in 2021, Tiger Global continued to be the lead investor in five.
Infrastructure material marketplace Infra.Market and health tech provider Innovaccer are the other two startups in which Tiger has invested around $100 million each in February this year.
“Both Tiger and SoftBank have similar strategies of leading a funding round and creating an investment benchmark for other investors. After this, they continue to make repeated follow-ons, marking up the valuations of these companies, driving up their total portfolio value," said a partner at a firm, which consults startups on fundraising.
In the past, Tiger Global has had successful exits in India, as it cashed in $3.3 billion from a total investment of $1 billion in Flipkart after Walmart Inc. acquired the entity. In Ola, Tiger reportedly made a five-fold return when it sold its investment. “Tiger Global is flush with liquidity and has seen very successful exits in India, giving it the ability to take more risks than other investors. The investment quantum also is far less than that of SoftBank, which leads late-stage rounds. Making more bets allows Tiger to equal out its returns in the long run if a certain investment doesn’t work out," the person said.
Tiger Global’s obsession with Indian tech has continued even after star partner and early backer of Flipkart, Lee Fixel, quit the fund in 2019. Scott Shleifer has been leading investments in India since then.
The private equity fund slowed down the pace of its investments in the country between 2016 and 2018, investing a mere $100 million in Indian startups across 21 deals, shows data from VCCEdge. However, its deal-making has picked up steam since 2019, having closed about 66 deals.
Tiger Global has written some of its biggest cheques last year, investing close to $200 million in edtech unicorn Byju’s and $100 million in foodtech company Zomato.
“Tiger will not lead late-stage rounds unless it is convinced about the firm’s fundamentals and the market it operates. Hence, it leading some of the rounds this year is proof of the confidence it has in India. It is also notorious for agreeing on higher valuations, which may not necessarily mean well for the founder or his/her cap table in the long run," said a lawyer who has worked with deal negotiations in Tiger-funded startups.
A Tiger Global spokesperson in New York declined to comment.
But there are many advantages of having them as investors, said the founder of a startup in which Tiger Global has invested. “They move very quickly after being convinced about the opportunity. Our fundraising was almost friction-less. A lot of founders like to have them on the cap table since they are very supportive even after the investment. The fact that they have a relationship with companies like Bain & Co., which assists some of their portfolio, is a known fact. And Tiger picks the bill for it," the founder said on condition of anonymity.
According to data provider Venture Intelligence, total investments in the first quarter of 2021 hit a two-year high of $4.2 billion.
“Large funds understand the value of signalling, especially for internet businesses, which is a winner-takes-all market. Hence, valuations are a form of strong signalling showcasing investor confidence. This funding cycle is far different from the previous ones since Indian digital businesses have leapfrogged by five years due to covid and users are willing to spend for convenience. The startup ecosystem has moved from ‘product fit’ to a product growth market," said Haresh Chawla, partner at True North Co. (formerly India Value Fund).