Tiger Global targets $6 Billion for new venture capital fund

That’s lower than the $8 billion some shoppers had initially been instructed the agency would probably goal, as markets have modified and as Tiger World focuses extra on early-stage enterprise bets, in keeping with individuals accustomed to the matter, who requested to not be recognized discussing non-public communications. The determine can also be lower than half the scale of the previous classic.

The brand new car, Non-public Funding Companions Fund 16, will spend money on startups, “largely in enterprise themes and in India” and “in a lower-valuation setting,” New York-based Tiger World stated in a letter to traders Thursday.

PIP 16 will give attention to internet-enabled enterprise software program, fintech and shopper corporations as a result of they’re “underpenetrated classes” with speedy and long-term progress potential, in keeping with the letter. The fund may also make “opportunistic follow-on investments” in Tiger World’s current roster of world portfolio corporations, together with by secondary share purchases.

Workers will kick in a minimum of $500 million, with most coming from founder Chase Coleman and agency accomplice Scott Shleifer, among the individuals stated.

A Tiger World consultant declined to remark.

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The agency instructed traders earlier this week that accomplice John Curtius, who targeted on software program and business-to-business investments, is leaving. He was liable for greater than 100 of the agency’s non-public wagers. It notified shoppers of his departure earlier than starting fundraising for PIP 16 to keep away from surprises after they’d dedicated capital, individuals stated.

This yr has been probably the most tumultuous since Tiger World’s founding in 2001, with the agency’s whole belongings tumbling to about $63 billion from $100 billion. Its hedge fund lost nearly half of its worth by August as shares swooned and startup valuations declined, whereas its long-only fund plunged about 62% by July.

Tiger World’s non-public portfolio fell within the third quarter and it marked down valuations each month this yr. Seven investments have every misplaced a minimum of $100 million, one of many individuals stated.

“Public market valuations declined rapidly and meaningfully in our focus areas, subsequently miserable valuations and deal exercise in non-public markets as the price of capital elevated,” in keeping with the letter.

Fundraising has develop into more and more more durable for companies this yr, as institutional traders together with pensions, endowments and household workplaces turned overexposed to personal fairness.

PIP 16 might be Tiger World’s fifteenth fund (it skipped No. 13). Its first shut might be Jan. 18, and traders who take part will get a decreased administration price of 1.75%, the agency stated within the letter.

The fund will make investments over a interval of a minimum of two years. At $6 billion, it is going to be Tiger’s third-largest non-public car. PIP 15 closed earlier in 2022 with a document $12.7 billion.

Over nearly twenty years, the PIP funds have generated a internet inner charge of return of 24%, in keeping with the letter. Twelve investments generated greater than $1 billion of positive factors every.

Nonetheless, the agency needed to mark down underperformers, it stated within the letter. Many of the fund’s bets have been in early-stage corporations, with a median funding dimension of $30 million — lower than the standard $50 million.

Tiger World did 275 offers to date this yr, in contrast with 383 for all of 2021, in keeping with PitchBook information. The agency’s present portfolio of lively investments are price about $45 billion.

“Fundamentals stay robust throughout the portfolio” and among the bigger corporations “are making ready to go public when markets are supportive,” the agency stated within the letter.