With some help from an intermediary, Skywalker Investment Advisors, which is backed by the owners of Rubamin, a business that is into metals and recycling of waste, subscribed to the fund. It would go on to become Tiger Global’s largest-ever fund, raising $12.7 billion.
“We got an introduction through an investment banking relationship, as otherwise, it is quite difficult to get through to them,” Rammohan Padiyath, the family office’s director, told Mint.
Skywalker’s investment in Tiger, during the highs of 2021, was driven by the firm’s reputation as a prolific technology investor, globally and in India. But as things stand, that bet may take some time to pay off. Because Tiger Global has been on a wobbly trajectory of late.
Prolific Investor
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Founded in 2001 by Chase Coleman III, Tiger Global found early success through its hedge funds and its public market funds which invested in the US technology stocks.
In emerging markets, it burnished its reputation in China where it made a killing through investments in JD.com, now the country’s largest retailer by revenue, and Didi Global, a ride-hailing app like Uber. According to a Wall Sreet Journal article, Tiger made $5 billion in gains from its $200 million investment into JD.com.
In India, Tiger Global is known to have backed over 160 companies. Its biggest bets include Flipkart, Just Dial, MakemyTrip, and more recently, Zomato, Ola Cabs and Ola Electric. Tiger’s best exit from India is Flipkart, where it sold its stake for $3.5 billion, an almost 3x return on its total investment of $1.2 billion, according to financial website Institutional Investor. In addition, a Financial Express piece from 2015 said that it made an 18x return out of Just Dial.
Today, however, Tiger Global’s roar is gone and the aggressive beast is a pale shadow of its former self.
A Rough Patch
In the past two years, Tiger’s extraordinary track record has taken a hit after US tech stocks plummeted in the wake of a spike in interest rates, which sucked sentiment out of the market. Overvalued tech stocks saw their value erode almost overnight. In many cases, this also impacted the valuation of the private market.
Since then, the investor has cooled off and has only been making small, follow-on investments at lower valuations. To be fair, Tiger Global isn’t the only investor to have taken a hit on its investments. Softbank Group, for instance, saw a huge wipeout in its Vision fund.
Most tech investors, including Alphawave Innovation, Accel Partners, Lightspeed Ventures and Peak XV Ventures, have also largely been quiet in late-stage investments and have switched their focus to early-stage investing.
Tiger Global isn’t the only investor to have taken a hit on its investments. Softbank Group, for instance, saw a huge wipeout in its Vision fund.
Tiger Global has already taken writedowns in its PIP15 fund to the tune of at least 18%, according to a Bloomberg report on 1 December 2023. In April 2024, Tiger Global raised PIP 16 (its 16th fund), which closed at $2.27 billion, well below its target corpus of $6 billion and far lower than its earlier fund.
The investor’s portfolio downturn played out more in 2022. It reported a 56% hit to its hedge fund and a 69% hit on its long-only fund, according to a Bloomberg report last year. Tiger Global also marked down its private funds portfolio.
Last November, founder Coleman took direct control of the private markets portfolio, after Scott Schleifer stepped down as head of the private equity fund.
Mint reached out to Tiger Global but the US-based investor did not offer any comment.
An Evangelist for India
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Tiger Global’s drive into the Indian tech ecosystem was driven by a sense of exceptionalism. It made a flurry of investments and set the benchmark for valuations. Most founders in the ecosystem wanted to be on its radar. As a result, the fund has accumulated significant goodwill among founders in India, particularly because of its “light touch”, “decisiveness” and backing of founders. And because typically, Tiger Global does not take a board seat on companies in its portfolio.
“Tiger had decided that its value was in providing the most ‘frictionless’ process for fundraising,” according to a unicorn founder, who ended up raising capital from the fund in a couple of days. “Once they decide to back you, they are unlikely to drag out of the negotiation or quibble about the valuation,” the founder said.
This was especially visible when Tiger Global was investing in India in 2015 and 2016 when it was writing cheques at a ferocious pace that would only increase during the peak of 2021. A 2023 Forbes article said that Tiger ended up backing one startup a day throughout 2021.
Tiger Global backed companies that already had other marquee investors in place. This allowed it to rely on an initial layer of diligence done by those investors.
In some cases, it would pour money into a bunch of companies in the same segment, with the intention of backing them through their public market debut. For instance, it bought into multiple edtech firms, including Byju’s, Unacademy, Classplus and Scaler. In the neobank segment, it invested in Jupiter and Open. In payments, it is an investor in BharatPe, Razorpay, PhonePe and Cred. In the broking segment, it is an investor in both Upstox and Groww. Similarly, it has backed both Games24X7 and Dream11 in the gaming segment. And in SaaS (software as a service), it has invested in the likes of Chargebee and Innovacer, among others.
Tiger Global also backed companies that already had other marquee investors in place. This allowed it to rely on an initial layer of diligence done by those investors. But the founders cited above said that the firm also relied on its own diligence. “They take a position on the sector before investing,” said one founder.
“After they invested in us, we heard from eight to nine people in our network that they had received a call from Tiger,” added a second founder.
Entering at the Peak
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Tiger Global ended up flooding the ecosystem with cheap money, investing at high valuations at the peak of the cycle in 2020 and 2021. Apart from entering at the top, the tendency to not negotiate on valuations fuelled many startups to new highs. Having raised three back-to-back funds in 2020 ($3.75 billion), 2021 ($6.67 billion) and 2022 ($12.7 billion), it invested in several startups between 2020 and 2022 at their highest-ever valuation.
For instance, Tiger Global invested in Byju’s in January 2020 and in subsequent rounds. It is thought to have put in close to $300 million in Byju’s, which it is unlikely to recover, given the legal battles the company is engaged in. Tiger is not the only one to have burnt its fingers investing in Byjus; several marquee investors, such as Prosus, General Atlantic, and Baron Capital, stand to lose their capital in the edtech. Global investors put in over $5 billion in Byju’s, with only early investors such as Lightspeed Ventures or Peak XV Ventures seeing returns on their capital.
Tiger Global’s investments at peak valuations in companies such as Pristyn Care, BharatPe and ShareChat look especially weak.
Apart from Byju’s, back in 2020 and 2021, Tiger was also investing in other startups such as OfBusiness and its unit Oxyzo Financial Services, BharatPe, DealShare, Pharmeasy, Unacademy, ShareChat, Slice, Pristyn Care, GoMechanic and CoinSwitch Kuber.
Barring Ofbusiness and Oxyzo, many of these investments have turned into duds, while others have struggled because of valuation markdowns and subsequent pivots. A few of these companies are also trying to grow into their valuations and are unlikely to be able to raise more capital at previous valuations.
Tiger Global’s investments at peak valuations in companies such as Pristyn Care, BharatPe and ShareChat look especially weak. Its investments across edtech are also unlikely to pay off, given the depressed sentiment in the sector. Smaller investments like GoMechanic have sunk because of fraud.
“Most of Tiger’s investments after the Lee Fixel era have not done well,” said one investor, who has tracked Tiger Global.
The Fixel Era
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Lee Fixel, who had a 13-year stint in Tiger Global until 2019, was an evangelist who helped put Indian startups on the global radar at a time when not many had heard of them. His best-known investments were in Flipkart, Ola and Delhivery. Numerous others also got funding thanks to his aggressive calls.
Fixel led Tiger’s investments in Flipkart over 15 rounds, investing $1.2 billion from 2011 till its complete exit from the e-commerce marketplace in 2023.
Fixel left Tiger Global five years ago to start his own firm, Addition. In June 2023, tech-focused news website Techcrunch reported that Addition was raising a $1.3 billion fund, its fifth fund in four years.
But under Fixel too, Tiger made some poor investments in India, such as Quickr, Shopclues and Hike Messenger. However, there were no large blowups due to poor corporate governance, as happened with GoMechanic and Byju’s.
Also, by 2017, Tiger had partially derisked its India portfolio, pulling out close to $1.7 billion after making partial exits from Flipkart and Ola Cabs, a VCCircle report from the time said.
Even with Flipkart, it was “touch and go” for a while, with the startup going through three near-death experiences, said the tech investor cited above, seeking anonymity as he was speaking about a peer. Tiger Global finally made its partner, Kalyan Krishnamurthy, the head of Flipkart, pushing the company’s founders to the sidelines, before it was eventually sold to Walmart.
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It could also be argued that Tiger’s bets in the post-Fixel era are yet to play out. Investors such as Tiger invest through funds that have a ten-year tenure.
Nevertheless, Institutional Investor quotes founder and current boss Coleman as saying he wished the firm had “invested a bit less” in 2020 and 2021, in a call with the firm’s investors in January 2024. “Every vintage year up through 2020 was positive; 2021 and 2022 are the tougher vintage years,” Coleman said.
Early Exits Ahead?
The downturn in tech stocks triggered redemption pressure from Tiger Global’s investors. The fund exited multiple liquid positions to manage this pressure across 2022 and 2023. From India, Tiger Global booked out at least $3.25 billion during this period, according to news website VCCircle. This included $1 billion to $1.4 billion each from its residual stakes in Flipkart and Freshworks, in addition to holdings in other companies such as Delhivery, Policybazaar and Zomato.
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Because they were made before 2015, some of these investments still turned out to be profitable, despite the exit taking place in the middle of a downturn. For instance, the news website Arc said that Tiger made a 5x profit from its Policybazaar exit.
But some clearly were mistimed exits. Tiger Global first entered Zomato directly ahead of its initial public offering in 2020, when the food-delivery platform was valued at around $3.25 billion, and then invested again a few months down the line at a valuation of $3.9 billion, according to VCCEdge, HT Media’s data platform. It added to the investment in Zomato at around $5.4 billion in February 2021. Tiger was also an early investor in Blinkit, in 2015. After Zomato acquired Blinkit in February 2022, Tiger acquired additional shares in Zomato because of the share swap at the time. However, when it began selling Zomato stock in August 2022, the shares were trading at around ₹46-52 apiece. It fully exited the firm at ₹91 a piece in August 2023. Tiger Global’s multiple on its investments in Zomato is likely to be less than 1.5x, according to VCCircle.
The quick exit also meant that it completely missed out on Zomato’s revival. The food delivery company has touched its all-time high in 2024 ( ₹213.80 on the BSE) and is currently trading at ₹207.30. Nearly 50% of its valuation is because of Blinkit, which Tiger missed out on because of its mistimed exit.
Silver Linings
On a brighter note, Tiger still owns stakes in more than a handful of decent-sized Indian unicorns. As companies in its SaaS, gaming and fintech portfolio begin to go public, these bets will start paying off.
Tiger Global’s tendency to wait till a company’s IPO may mean that over 18-24 months, as these companies make their public debut, it will see its gains from India improve. Some of the larger startups, such as Groww, Razorpay, PhonePe and Gupshup, have already outlined plans to list in the medium term.
Earlier this month, the GST council recommended that the government overrule retrospective tax demands against real money gaming companies, giving much-needed relief to Tiger-backed companies such as Dream11 and Games 24×7.
Tiger Global’s investment approach over the last year has been tamer.
Because of the smaller size of the fund, and perhaps because of the paucity of assets in the market, it has largely restricted itself to follow-on investments.
The downturn in the market has meant that it could make these investments at lower valuations. For instance, Tiger entered Meesho in March 2024 when the e-commerce platform raised capital at a discount to its 2021 valuation. With Coleman back at the helm, this may be a sign of things to come.
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For investors such as Skywalker, this is the hope—that the remaining unicorns will go public after they grow into their valuations. The family office has now moved on to focus on investing in energy transition, particularly lithium-ion battery recycling. On whether this shift from tech was prompted by Tiger Global’s disappointing performance, Padiyath, exuding confidence, indicated he expected that investment to pay off in time. “It is too early to assess the fund’s performance as it has only been three years,” he told Mint.
Padiyath is counting on Tiger’s flair for finding moonshots to pay off over the coming years. “Typically venture capital funds go through cycles. They will see all sorts of phases. This is one of those difficult times. Only people who have got patient capital can get into venture funds, hence we are not worried too much,” he said. “Because we are patient investors.”