Quiet comeback by Tiger Global but will be selective

In early December, it surfaced that Tiger Global, the New York-based hedge fund, had put $5 million (Rs 32.2 crore) in news curation app InShorts. In October, the hedge fund co-invested $2 mn in tea cafe chain Chaayos. It also participated this year in a $75-mn fund-raise by insurance aggregator PolicyBazaar, a $50-mn one by home rental start-up NestAway and a $100-mn one by logistics firm Delhivery, in March.

With Tiger Global harvesting an estimated $1 billion (Rs 6,450 crore) in partial exits from Flipkart and Ola (it has invested $1.25 bn in India), the big question is if it will resume investing in India. ‘‘It is buoyant about the India opportunity but will invest selectively,” says the founder of a start-up Tiger Global has invested in. 

He cites PolicyBazaar and NestAway. Tiger had led a $30-mn round in NestAway in April 2016 with Russian billionaire Yuri Milner and IDG Ventures India, and also invested in the recent round. ‘‘It needs to justify returns from Flipkart and Ola to its investors, as it had entered these companies at high valuations,” added the founder.  

Tiger Global had gone slow in investing in India. In the 18 months between late 2015 and early 2017, it participated in follow-on rounds of only two companies. Compared to that, it invested in 18 start-ups in a 12-month period in 2014-15. That was driven by a fear of missing on investing in Indian start-ups. 

However, soon investors realised that valuations ran ahead of fundamentals and India’s internet economy was not growing like China’s. Tiger has been investing selectively and is unlikely to be as aggressive as in the past. ‘‘It will take a backseat, unless it raises a new fund. This is driven by its mandate,” says the co-founder of an investee entity.

Tiger has been consolidating its position in India, with an objective to bring liquidity for its investors. ‘‘A fund has a cycle. After three-four years of investment, it needs to generate exits and return for investors,” says the founder. For instance, SoftBank’s $100-billion Vision Fund is in an investment period and after a few years, it will have to focus on exits.  

‘‘Tiger has done a stellar job with Flipkart. There was a period when its cash burn was very high, Amazon was right at its heels. From there, it has brought in SoftBank, Tencent and Microsoft which are pumping in over $2.4 bn,” says the co-founder of an e-commerce firm. Half of it will go in buying out existing investors like Tiger Global and Accel. 

WHY IT MATTERS

• Tiger Global has been among the top investors in Indian e-commerce 

• Since 2005, it has invested over $1.25 bn in 109 Indian start-ups

• Co-invested in five start-ups in 2017, but unlikely to turn more aggressive

• Till Flipkart & Ola exits, Tiger had made 25 exits worth $464 million

• Since 2016, Tiger went slow on deal in India and focused on Flipkart

• Exits: Just Dial, JM Financial, Shriram Transport, Jindal Saw, Myntra, Little, ZO Rooms, LetsBuy.com, Commonfloor, CaratLane, BabyOye