Tiger Global & Bain
Aside from DD's, what kind of projects do Consulting firms like MBB do with VC's / Crossover Hedge Funds / Growth Investment firms?
"Tiger employs an army of Bain consultants."
"[Tiger Global is] very clear on what they don't do. They stay out of your hair, they don't take board seats, they're not going to tell you how to run your company," Outreach's Medina said. "They tell you, 'We're going to give you money, and we're going to make Bain available to you,' which is very expensive — that could be alone between half a million to a couple million dollars."
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I think it may be that once TG invests the mgmt team can request help from Bain for like strategic projects. For example let’s say they want to enter a new market or launch a product and want some consultant help, they may ask Bain to analyze the market or help them come up with some sort of plan for launching their new product. Whatever else Bain may do is probably listed on their website. Tiger seems to just offer their port co’s the ability to hire Bain and Tiger seems to pay the bill
if a portco needs bain's help with something, tiger will foot the bill. simple as that. win-win-win for everyone - the portco gets free advice from a top consulting firm, tiger helps its portco without having to expend resources on a specialized ops team, and bain gets exclusive access to clients that have a decent likelihood of succeeding with tiger's backing, without sacrificing on price
Has Tiger ever hired from MBB (or other Tiger cubs for that matter)? Asking because they must hold consultants in pretty high regard to offer this to portcos no questions asked.
"Second, Tiger employs an army of Bain consultants. As a result, Tiger doesn't have to do its homework on the fly; it's done it in advance" sounds like Bain does CDD stuff for them too, not just portco stuff
Yeah I'm pretty sure they also do DD. Explains how Tiger is able to do so many deals.
No. They hire consultants because they know their own analysts’ time is way more valuable and it would be too expensive to get them to do the boring and non-investment decision-making work that Bain gets paid to do.
This is not true.
https://www.listalpha.com/post/where-does-tiger-global-recruit-from
Only one bcg person as far as I can tell. You can check the actual raw data on the website.
A colleague told me that they hired Bain to do very detailed, sector mapping for them for their target markets. This includes identifying tech trends, which subsectors are good, and what it takes to win within those. Hence, when Tiger goes to pitch to companies, they have very relevant content to offer compared to generic bullshit that other investors will sprout. Since Tiger takes thematic bets, they are already aware of the sector and hence close deals quickly. They've deployed billions of dollars in India with one partner (maybe 2 now) sitting out of NYC. This is completely insane, IMO and a very very smart way to making money.
Any real HF will do that sort of due diligence. I still think they're effectively just getting paid private tech risk premium which is working now. I'm sure they're agile enough to navigate changing market cycles but I believe their actual public equities portfolio isn't doing well this year. Also do remember they're net long.
Yeah but the thing with VC is that most investors respond/ react to the market instead of trying to systematically predict. Tiger has been very good in their conviction that way. HF is different as you operate in a space that is less fast paced and has more information no?
There are other examples of strategy shops have "exclusives" with investment firms (mostly PE). B Capital Group and BCG is another example: B Capital & BCG - B Capital Group (bcapgroup.com)
As someone else, it's a classic Michael Scott "win-win-win." Tiger improves its appeal to potential targets and can efficiently pull together great analyses that fall outside of the skillset of most of their investment team. The Port Co gets access to thought leaders in their space. The strategy firm gets a great recurring revenue stream (although likely discounts their rates I would imagine).
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I wasn't comparing the profiles of B Capital and Tiger Global, merely pointing out another use case.
Agreed, b cap is trying to do this as well. But from what I know it's more after the portfolio company is onboarded and less thematic
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