Tiger Global Management, already one of the most voracious startup investors in recent years, is roaring into 2021 more aggressively than ever.
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The 20-year-old New York-based investing firm — part hedge fund, part private equity investor — has not only quietly become the most prolific investor in billion-dollar startups, it is also significantly picking up the pace at which it deploys capital in 2021, according to our analysis.
How did the firm, now with an estimated $65 billion in total assets under management, become one of the biggest startup investors in the world? And how does Tiger, which first began investing in private companies in China and India less than two decades ago, now routinely outmaneuver some of Silicon Valley’s most sophisticated venture investors?
With these questions in mind, we decided to take a closer look at the strategy and portfolio for Tiger Global, which Crunchbase data shows is investing in startups in 2021 at 10x the pace it did just a year ago.
Tiger Global executives rarely speak to the media and the firm likewise declined to comment for this article. What follows is an analysis of its business, sourced from Crunchbase data unless otherwise noted.
Picking up the pace
Already one of the most active lead investors in startup funding deals this year, Tiger Global has picked up the pace of its investing significantly in 2021, Crunchbase data shows: The firm has invested in 118 companies this year so far, up an astonishing 10x compared to its investing pace in the first five months of 2020.
The vast majority — 90 — of those investments so far this year are new portfolio companies.
For the whole of 2020, the firm invested in 69 companies, 47 of which were new to the fund.
And Tiger isn’t just doing more deals — it’s also throwing more dollars at them. A lot more: By dollar amount, its investments are also up 10x compared to the first five months of 2020.
So far in 2021, it has led or co-led deals totaling $10.5 billion and participated in rounds which totaled a further $11.5 billion, Crunchbase data shows. That compares with all of last year, when the firm led or co-led deals valued at $5 billion and participated in a further $7.8 billion in funding where other firms led.
In fact, Tiger Global has led or co-led startup investment at greater amounts than any other firm so far in 2021 — outpacing traditional venture investors like Sequoia Capital, which has led or co-led $4.1 billion worth of venture deals this year, per Crunchbase data.
Tiger Global’s vigorous investment pace matches what’s been described as its extremely aggressive dealmaking approach: The firm reportedly pounces on deals very early, moves extremely fast to close on them, and stuns with sky-high valuations.
Once it’s invested, it also reportedly takes a hands-off approach with its portfolio companies. Rather than work closely with founders to grow their businesses — as many venture investors do — Tiger Global pays for its portfolio companies to have access to consultants at Bain & Co., The Information reported earlier this year, citing startup founders who had worked with the firm.
The firm is the current leader among a new breed of growth investors moving into Silicon Valley’s turf. Also in that pack are investors like the SoftBank Vision Fund, which so far this year has led or co-led deals worth $8.6 billion, per Crunchbase data. The next largest are Coatue, which has led or co-led $6.9 billion in startup investment this year, Insight Partners at $5.7 billion, and D1 Capital Partners and Silver Lake, each at $5.3 billion.
Tiger’s aggressive pursuit of startups has turned it into the biggest investor in unicorn startups, with 126 such private companies currently in its portfolio, per Crunchbase data.
It has added 48 of those unicorns to its portfolio in 2021 alone, including rounds it led in corporate credit card issuer Brex, digital lending platform Blend, and creator platform Patreon — all valued as billion-dollar companies in prior funding rounds. It closed these latest fundings less than a year after earlier rounds.
Tiger Global’s investment in connected fitness company Peloton illustrates its strategy of moving fast and early. The firm was the sole lead for Peloton’s Series B in 2014 and co-led its Series C in 2015 alongside True Ventures. By the time of Peloton’s IPO in 2019, Tiger had amassed a 20 percent stake — more than any other institutional investor.
If the firm had exited at the time of Peloton’s public debut, it would have netted around $2 billion.
But Peloton’s share price went on to almost quintuple in 2020. And though the stock has since come down from last year’s high, shares are still up almost 4x as of this writing. That means that if Tiger had kept its shares, its stake of Peloton’s current market capitalization of more than $33 billion would alone be worth $6.5 billion. That, from one investment.
To date, the firm has invested in 372 companies while they were still private, of which 87 have since exited.
Those exits include some of 2021’s highest-profile IPOs. Tiger owned 7.3 percent of Roblox at the time of the online gaming platform’s IPO in March 2021, per SEC filings. That’s after Tiger had led Roblox’s Series F with Greylock in 2018 and continued to invest in subsequent funding rounds as well as secondary financings. Of Tiger’s 2021 listings, Roblox is up the most at 76 percent since its direct listing in March, with the investment firm’s estimated stake currently worth more than $3.5 billion.
Tiger also invested in restaurant delivery platform Olo and became, via secondary financings, the second-largest institutional investor in the New York-based startup, with a 14.3 percent stake. Olo went public in March of this year. With Olo’s market capitalization at around $5.1 billion as of June 1, Tiger’s stake would be worth just over $700 million.
In a letter to investors obtained earlier this year by Institutional Investor magazine, Tiger Global founder Chase Coleman looked back on the firm’s 20-year history, 18 of which have included investing in private equity.
“We are grateful to have begun our investment careers at a time when the internet era was just beginning,” he wrote in the letter. “Inexperience may have been an asset when it came to imagining what a new internet-connected world could look like, and our research indicated that market leaders could achieve very high returns on capital.”
That approach has apparently paid off very handsomely: Tiger’s net IRR for its private equity business is a stunning 26 percent over the life of these funds, according to the letter.
A Tiger is born
Tiger Global Management’s private equity business may boast hefty returns and has become the part of the company that has garnered the most headlines in recent years, but PE is not how the firm got its start.
The firm was founded by Coleman in 2001 with an initial check of $25 million from the hedge fund founder Julian Robertson of a separate firm named Tiger Management.
With an inauspicious start coinciding with the dot-com bust, Tiger Global saw an opportunity in Chinese public technology stocks that were undervalued and growing. Perhaps more importantly, it saw an opportunity in China to invest in not only the public markets, but also in private companies in the e-commerce space and correctly predicted the growth of Internet-enabled retail in the country.
In 2003, Tiger created its first fund to invest in private companies, raising $75.8 million.
Today, the private equities business is led by Scott Shleifer, who joined the firm in 2002 from private equity firm Blackstone Group and led the early investments in Chinese private companies. Lee Fixel, the other lead partner, joined in 2006 and headed up investing in India. Fixel left in 2019 to start his own firm, Addition.
The firm now has $65 billion under management, with the private equity side reportedly now the larger of its two businesses, at $35 billion compared to $30 billion for its public equities business.
More capital to deploy
The firm increased its most recent fund size quite substantially to place more and bigger bets on private companies. Its latest fund, XIV, (its 13th fund, reportedly named with Roman numerals for superstitious reasons) closed earlier this year at $6.75 billion, marking the firm’s largest fund raised to date.
And the firm is already raising a new $10 billion fund, Axios reported last month, citing sources familiar with the matter.
So far, Tiger Global has raised eight funds at a total of $23.4 billion for its PE business over the last decade, per Crunchbase data. A decade back in 2011, it had closed fund VI at $1.3 billion.
Its hedge fund, though now the smaller of its two businesses, continues to bring in outsized returns as well. In 2020, the firm was named the top hedge fund manager in the world, with reported returns of $10.6 billion, per Institutional Investor, a figure that does not include returns to its private equity business.
Tiger Global is focused on the U.S., China and India as its core markets.
Of the 81 new portfolio companies it added in 2021, the U.S. dominates with 53 companies. The firm has also added 13 new portfolio companies in Europe this year, including three headquartered each in France and the U.K.
Across Asia, the firm has made 10 new portfolio investments this year, with India leading at six new portfolio companies, Crunchbase data shows. In Latin America, it has added three new portfolio companies this year, including one each in Brazil, Mexico and Uruguay.
The largest rounds it has led in 2021 this far were above $500 million; investments in two Southern California-based companies, knowledge platform Kajabi and home service platform ServiceTitan, and India-based social media platform ShareChat.
Tiger Global is also no stranger to leading inside rounds. It led follow-on funding in Scale AI, having led the Series D and co-led the Series E. With Chargebee, it led the Series B and co-led the Series G. It co-led the Series A and led the Series C for Infra.Market. And for Lattice, it was the sole lead for the Series C, D and E — all within the space of 18 months.
Who cubs around with Tiger?
The firm’s most frequent co-investors in the same funding round in the last decade are venture investor Accel by a strong margin, as well as growth equity firms Coatue, DST Global and Dragoneer Investment Group.
The firms with the highest count of investments in Tiger Global Management’s portfolio of companies in the last decade are led by venture investors Accel, Y Combinator, Sequoia Capital and Sequoia Capital India.
Leading the pack
Last year was an exceptionally good one for Tiger Global as well as many other venture and private equity firms investing in private companies.
So far, 2021 is shaping up to be another blockbuster year for Tiger, with four portfolio companies acquired and eight portfolio companies that have gone public, less than half-way into the year.
Will the firm’s increasingly bold bets on startups pay off in years to come? It’s worth watching closely: Given its giant footprint in the world of private companies, if Tiger Global succeeds, so will many others.
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Illustration: Dom Guzman
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