Tiger Global trims fundraising target as startup market cools
Tiger Global Management, the tech investor who typified the Silicon Valley startup craze, is reducing its ambitions for a sizable venture capital fund. According to persons familiar with the situation, the New York-based manager told investors that it is cutting the target size for its most recent venture fund from $6 billion to $5 billion. Tiger had anticipated that it would raise a sum of $6 billion, well short of the $12.7 billion it raised for its previous fund, according to several investors.
In the past year, the startup market has changed from scorching to cold as investors have backed away from riskier bets like unsuccessful firms in reaction to rising interest rates. Privately traded IT company shares have lost value, with discounts ranging from about 30% to 40% to as much as 80% from valuations from previous fundraisings.
The tech crash has devastated Tiger's massive stock-picking operation, with its flagship hedge fund and long-only funds suffering catastrophic losses as tech stocks declined. Although its venture funds have been slower to write down assets, its portfolio was heavily weighted in numerous failing industries, such as fintech and enterprise software.
Tiger supported more venture-backed transactions than any other American company in 2021, frequently committing to sizeable investments in venture-backed businesses at lofty values within hours after initial talks with founders. It made extensive use of management consultants to assist with startup evaluation and due diligence. As valuations peaked and worries about a bubble intensified, Tiger invested the majority of its most recent venture fund, a $12.7 billion vehicle formed in 2021 and 2022 and one of the largest startup funds ever established. Tiger began slowing down its aggressive deal-making pace as the market deteriorated and switched to investing early in the life of firms.
