Tiger Global is known for fueling the pandemic-era venture capital boom, investing heavily in a wide range of startups and launching bidding wars for the most unproven startups, leading to high valuations. In 2021 alone, hedge funds backed 315 startups, according to PitchBook data.
And much of the VC world wasn’t happy about it at the time either. By the end of 2021, the New York company had persuaded investors to pour $12.7 billion into its 15th venture fund (PIP 15), then committed most of that capital to more startups over the next few months. TechCrunch reported that most of the fund’s money was already fully invested by May 2022.
The company’s vigorous investment strategy backfired. When the U.S. Federal Reserve began to rapidly raise interest rates in 2022, money became even more scarce and the value of startups fell significantly. And as 2024 comes to a close, Tiger’s influence is still being felt as startups are still struggling with the inability to live up to 2021 valuations.
The problem is: Tiger Global’s 15th fund performed particularly poorly, while many of its other funds at the time delivered mediocre returns, according to a recent disclosure by one of Tiger’s investors.
As of June 30, 2024, Tiger Global PIP 15’s paper loss is more than 15%, according to a recently released report by the California State Teachers’ Retirement System (CalSTRS), one of Tiger’s investors. These steep losses put the fund in the bottom 10% of all venture funds raised in 2021, according to the latest PitchBook benchmarks.
Last year, Bloomberg reported that many of the top valuations had been trimmed, including 45% in email company Superhuman, 72% in search engine DuckDuckGo, and 94% in NFT marketplace OpenSea.
Tiger Global and CalSTRS declined to comment.
It is true that it typically takes a decade for the returns a VC fund achieves to be locked in through an exit or other financial sale rather than just paper. Therefore, it is possible that some of these companies will grow again beyond their 2021 highs.
However, other 2021-vintage funds in the CalSTRS portfolio are performing noticeably better. For example, according to the report, Valor Equity Partners’ fifth fund paper yield (a measure known as internal rate of return) is a strongly positive 15.7%. Meanwhile, 2021 funds from OakHC/FT, IVP and GGV (rebranded this year as Notable Capital) generated returns of 8.7%, 4.1% and 2.8%, respectively.
While a number of large venture investors, including Andreessen Horowitz, General Catalyst and Kleiner Perkins, have succeeded in raising significant funding this year, Tiger Global has scaled back its private market ambitions, in part because it has been unable to raise as much new capital as it originally intended. Specifically, in October 2022, Tiger Global began raising $6 billion for its 16th private markets fund. The Wall Street Journal later reported that the fund’s target was revised to $5 billion.
But the New York company did not achieve even half of its new goal. After raising funds for about 18 months, PIP 16 closed earlier this year with about $2.2 billion in commitments, Bloomberg reported. It’s still a significant amount of money. But it cannot compare to previous ambitions.
Nonetheless, Tiger Global still has significant funds available to invest in startups. So far this year, the company has participated in 24 VC deals, including Waymo, OpenAI, Scale AI, and Wiz, according to PitchBook data.
It’s been nearly three years since Tiger Global’s investment frenzy peaked, but it will take time for the company to shake off its reputation as an investor who made many bad bets during the pandemic.
Some of the people responsible for the rapid-fire VC investment strategy of that era are no longer with the company. John Curtius, one of Tiger Global’s leading VC investors, left the company at the end of 2022 to start his own firm called Cedar Investment Management. The company was reportedly targeting $1 billion in funding. It is not yet clear whether the fund has been created or has started investing. Scott Shleifer, head of VC at Tiger Global, also transitioned into an advisory role at the start of the year.
