Tiger Global cuts fundraising target as startup market cools
1 min read . Updated: 02 Feb 2023, 07:10 PM IST
PremiumProlific startup investor is aiming to raise $5 billion, less than half its initial ambition
Tiger Global Management is scaling back its plans for a large venture-capital fund, a reversal for the tech investor that epitomized the Silicon Valley startup mania.
The New York-based manager told investors it is reducing the target size for its latest venture fund to $5 billion, down from a $6 billion target it set when it began fundraising last fall, according to people familiar with the matter. The $6 billion itself was well below Tiger’s early expectations that it would raise a roughly comparable fund to its last, which totaled $12.7 billion,some investors said.
The startup market has gone from searing to icy in the past year as investors fled risky investments, like unprofitable startups, in response to higher interest rates. Shares of tech companies that trade privately have plummeted in value, with discounts from around 30% to 40% to as much as 80% off valuations from earlier fundraisings.
Tiger’s giant stock-picking business has been pummeled by the tech rout, with its flagship hedge fund and long-only funds recording historic losses as tech stocks soured. Its venture funds have been slower to mark down holdings, but its portfolio was heavy in many struggling areas including fintech and business software.
Tiger backed more startup deals than any other U.S. firm in 2021, sometimes committing to large investments in startups at high valuations just hours after initial meetings with founders. It leaned heavily on management consultants to help assess startups and conduct due diligence. Tiger invested most of its last venture fund—the $12.7 billion vehicle raised in 2021 and 2022 that was one of the largest startup funds ever raised—as values crested and concerns over a bubble grew.
As the market soured, Tiger started pulling back its rapid pace of deal making, and pivoting to making investments earlier in companies’ lives.
