Kind of nuts to see Tiger Global fall so fast, looks like they failed to sell the portfolio so now breaking it up.
https://pitchbook.com/news/articles/tiger-global-…
Just a few years ago, Tiger was praised for its reputation in the industry for writing bigger checks, more quickly, at higher valuations, with fewer strings attached, than any big VC. Their philosophy:
- By moving fast, Tiger avoids sitting on their own investors' cash for as long as three years. Even if their per-investment returns are lower, their overall returns can still be higher.
- Tiger considered missing out on a hot deal is a much bigger mistake in VC than overpaying for the same deal (Alibaba in this case). So Tiger deliberately overpays — and often shuts out rival VCs in the process.
- The team didn't believe that VCs really add much value beyond the cash they invest. So it didn't take board seats or otherwise interfere with its portfolio companies.
- Tiger free-rode on the top-tier VCs by effectively outsourcing due diligence to them. If the likes of Sequoia and Kleiner Perkins and a16z all have term sheets out to a company, Tiger is happy to trust their judgment.
Looking back, their investment process was questionable at best and foolishly negligent at worst.
I think longer term they still can win if you assume it's just a liquidity issue right now
Who is advising on this deal?
Evercore PCA. My shop looked at a few of the assets. They said they got a ton of inbound interest.
Remember when they were called geniuses for indexing the VC market. The genius of overpaying for every company, having Bain do their entire DD or doing no DD at all, and offering their portcos virtually nothing apart from cash to burn. Bull market merchants.
More pain is coming for the VC industry / VC-backed companies and articles like this prove it. There is no liquidity out there to unload their investments at a non-significant loss. LPs want some liquidity - funds are going to struggle heavily fundraising until LPs receive liquidity.
One hope for VC is that the IPO window reopens in a meaningful way and Cava may have cracked the door open - however, I think the last thing the Fed wants to see is a booming IPO market when they're trying to kill inflation.
Do you think it is more likely PortCo's go under or take a down round if they cannot find an exit opportunity?
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