Tiger Global Slashes Venture Activity Amid Market Challenges in 2023
In 2023, investment heavyweight Tiger Global is facing a considerable slowdown, participating in 90% fewer venture deals than the previous year, with activity particularly reduced in Q4. After engaging in 288 deals amounting to $23.2 billion in 2022, Tiger Global has only joined 27 deals totaling less than $2 billion so far. The market downturn, influenced by rising interest rates, inflation, and public market volatility, has prompted the firm's investment retreat. Notably, Tiger Global's Private Investment Partners XV fund reported an 18% paper loss, and significant markdowns occurred for portfolio companies such as Superhuman, DuckDuckGo, Bored Ape Yacht Club, OpenSea, as well as crypto investments post-FTX collapse. Among their sizable funding rounds were a Series I for Databricks and a lead investment in Brazilian fintech startup Nomad. This pullback is mirrored across the venture capital landscape, with other major firms like Index and Insight also reducing their investment pace, while some like Y Combinator, Sequoia Capital, and Unpopular Ventures maintain steadiness.
Bearish
Tiger Global's substantial reduction in venture deals signals a broader sense of caution in the venture capital market, indicating a response to market challenges such as interest rate hikes and inflation, which typically lead to risk-averse behavior among investors. The firm's significant markdowns on portfolio companies, particularly in the crypto sector following the FTX collapse, reinforce concerns about market stability and investor confidence. These factors collectively suggest a bearish outlook for the crypto market, as reduced venture capital activity could translate into fewer investments in crypto startups, potentially slowing down innovation and new developments, and influencing a more conservative approach among traders in both the short-term and long-term.