Tiger Global Investor Relations Team Leaving

Several Tiger Global Management employees focused on raising capital for the New York firm’s venture funds have taken buyout offers, according to a person familiar with the matter. The departures of the staff, who worked with prospective investors, come as the firm has struggled to raise money for its latest venture capital fund after a collapse in startup valuations soured its paper returns for earlier funds.

As of the second quarter of 2023, a $12.7 billion fund that Tiger started making investments from in October 2021 had a paper loss of 18%, calculated as an annualized return net of management fees, according to internal data distributed to investors in the fund. That’s a slight improvement from six months earlier, when the 2021 fund showed a loss of 20%. The fund’s performance is in the bottom quartile of funds started that year, the document said, and has also lagged the S&P 500’s annualized net return in the same period.

The Takeaway

• Tiger employee buyouts are the latest example of VC cost-cutting
• Tiger’s $12.7 billion had lost 18% on paper as of June
• Tiger could soon show a $350 million gain from OpenAI stake

As of June 30, 2023, the $12.7 billion fund hadn’t returned any cash to investors, which isn’t unusual for such a young fund. But the paper losses are closely guarded secrets that reflect the kind of write-downs other venture firms have been making over the past two years as tech valuations have fallen.

It isn’t clear how big Tiger’s investor relations team is, but the departures are the latest example of belt-tightening across the venture industry. Firms are raising smaller funds and striking fewer deals, reducing the need for sprawling support staff—including those who help firms raise money from pension funds and endowments.

Tiger embarked on a remarkable dealmaking blitz during the pandemic. Starting in 2021, it invested at least $19 billion in private tech companies in a nearly two-year period. Many of those bets, such as fintech Revolut, delivery startup Jokr and a bevy of crypto startups, have soured. For instance, the 2021 fund lost $38 million on now-defunct crypto startups FTX and FTX US, the recent document said. The fund also bought $304 million worth of shares in TikTok owner ByteDance and marked it to $294 million as of June 30. The fund also marked down a $100 million investment in Google Search rival DuckDuckGo to $33.6 million. A $126 million investment Tiger made in OpenSea, a marketplace for nonfungible tokens, was worth $15 million.

“A majority of capital was deployed in 2021–-2022, near the peak of the last cycle, which has presented challenges, as down rounds and markdowns continue to flow through the portfolio,” said the document, sent to existing Tiger investors by an investment bank. It said the company has invested $11.4 billion, meaning it has another $1.3 billion for additional investments in the startups the fund has previously backed.

On the positive side, the Tiger fund’s $125 million purchase of OpenAI shares in late 2021 was worth $161 million as of June, but that figure could nearly triple if the company completes a new equity fundraising at a $100 billion valuation.

Poor performance has made it difficult to convince investors to open up their wallets again. For its latest venture fund, the firm had raised $2.7 billion as of June, 55% below the target it set in 2022 and just a sliver of the prior fund’s size, The Information previously reported. It’s unclear whether the firm raised additional capital after that point.

Meanwhile, two partners that led its dealmaking charge during the pandemic have left or stepped back from the firm.

In November, the firm said its head of privately-held investments, Scott Shleifer, would move into an advisory role, The Information was first to report. The change followed the departure in October 2022 of software partner John Curtius, who led many of Tiger’s startup deals.