A year ago, Tiger Global Management leaders put $1 billion in personal capital to back dozens of venture capital funds investing in the youngest startups. It was an aggressive new effort intended to give hedge funds more access to promising companies after the market for more mature tech start-ups faltered.
But over the spring and summer of last year, the market for young startups also deteriorated, leaving Tiger with a negative return on investment in startups, prompting the company’s partners to cut back on early-stage funds they had previously promised orally or in writing. I called several managers of Those commitments should be cut, according to six people he spoke with Tiger staff about the deal. According to three of his, Tiger employees often cited backlash from the company’s own backers or his partners at Limited as the reason.
Tiger’s change of heart could damage its reputation with some startup investors and make it harder for the company to win startup deals in the future. The episode also saw Tiger, which invested more money in startups than any other company during the pandemic-boosted boom, appear to be under pressure from LPs as startup valuations start to fall. I also showed that it looks like This is notable because during periods of low investment returns, the LP is likely to wield greater power over his VC fund manager.