Fintech's biggest investor in 2022 Tiger Global reels from $17bn losses
The hedge fund is one of the biggest investors in high-growth, speculative tech start-ups.
Tiger Global is one of the most oft-spoken names in fintech funding circles, with reportedly more billion-dollar startups than any other firm – but things may be about to change.
LCH Investments calculates that the behemoth investor has suffered losses of around $17bn during this year’s tech stock sell-off, wiping out about two-thirds of its gains on assets since 2001 and making it one of the biggest dollar decline for a hedge fund in history, according to the FT.
Founded by Chase Colman, Tiger Global’s aggressive strategy focusing on high-growth, speculative tech companies, has gained it renown within the industry over the years.
But in an environment of rising interest rates, its target sector has lost some of its sheen. So-called 'spec tech' companies - many of which are reliant on significant cash burn to create initial value and have a long path ahead to reach profitability - have been subject to a repricing by the market due to predictions that future profitability could be affected by increasing costs of capital. Counting many such companies within its portfolios, Tiger Global has taken losses as a result, with its investments slumping in value.
“There is a general consensus that loose monetary policy helps to inflate [tech] asset prices,” says Ruth Foxe Blader, Partner at venture capital firm Anthemis. “[In an environment of rising rates] we will definitely continue to see some repricing.”
With the S&P 500 down by 16 per cent, the Dow Jones by 11 per cent, and the Nasdaq by a whopping 27 per cent, tech companies have collectively suffered large price declines this year.
Tiger Global’s recent investments include several star performers in the European fintech sector, including Revolut,Checkout.com, Qonto and TrueLayer. Indeed, CB Insights reported that for Q4 2021 and Q1 2022, Tiger Global continued to be the most active fintech investor, backing 37 and 39 fintechs respectively. A pivot to a more bearish investment strategy could have far-reaching effects across the industry, according to Anthemis.
“I don’t know what it means for the companies that [investors like Tiger Global] have invested in, at the series A round in 2021 for instance,” added Blader. “Can those companies count on them for follow-on funding? It will test our assumptions to see, long-term, whether those companies can bring in additional funding and count on support from earlier backers.”
Tiger Global’s news comes as another key global investor, SoftBank, suffers a $27bn loss to its Vision Fund due to rising interest rates and China’s regulatory crackdown on tech firms.