Tiger Global falling short in latest fundraising push

Tiger Global is falling short in its latest attempt to lure new investors, securing just over $2bn for a fund targeting $6bn after eight months, underscoring concern over valuations of technology companies.

New York-based Tiger, which has $60bn of assets, started raising money for its 16th private equity fund in October with the intention of making new investments in companies it believes are undervalued.

It completed the “first close” of the fund — at which point funds typically raise more than half the targeted amount — in January and remains well short of the $6bn goal, according to a securities filing on Friday. It is still trying to raise more cash.

Tiger is the latest large venture firm that has struggled to raise funds. New York-based Insight Partners has raised just $2bn for a fund targeting $20bn launched last June and this week told investors it was reducing its goal to $15bn.

Venture capital funding has collapsed over the past six months to levels not seen in a decade as investors have soured on illiquid private markets and the value of technology companies has crashed. US venture firms raised nearly $12bn in the first quarter, a 73 per cent decline versus the same period of last year.

Tiger is seeking cash from large institutional investors such as pension and sovereign wealth funds as well as wealthy individuals with money at large brokerages like Morgan Stanley.

Even at the outset, Tiger had scaled back ambitions. The target was less than half the $12.7bn it raised for its last private equity fund in 2021, reflecting investor wariness and falling valuations.

Tiger declined to comment. One person familiar with the fundraising effort said the group was “happy” with the progress so far.

Tiger, which was founded by Chase Coleman in 2001, has over the past decade emerged as one of the most prolific venture capital investors after backing hundreds of start-ups. It has invested more than $20bn in private start-ups since the beginning of 2020, according to documents seen by the Financial Times.

Its largest private holdings include stakes in TikTok parent company ByteDance, fast-fashion company Shein and payments start-up Stripe.

During a coronavirus pandemic-era boom in tech valuations, Tiger upended the venture world by offering founders large cheques with few of the demands that private equity groups often make, such as representation on the board.

The enthusiasm of Tiger, as well as other big investors in private tech groups such as SoftBank and Coatue, was a significant factor in the sharp increase in valuations before the recent reversal.

But these investors are now less active, according to several founders backed by them, adding to fears that start-ups will have to accept far lower valuations if they are to raise cash again.

However, some bets made by Tiger’s earlier fund, known as PIP 15, are paying off.

The fund pivoted to early stage investments with an average cheque size of just $30mn and built a “meaningful ownership” position in OpenAI, the parent company of generative artificial intelligence start-up ChatGPT, according to a letter to investors in October.

OpenAI recently raised $300mn in round that valued it at $29bn.