The Cat is Out of the Bag

April 12

Hey folks, Anmol with the update today. The last month and a half has been quite busy with work and I had also been going through somewhat of a writer's block. I have been wanting to write about Tiger's rapidly increasing pace of investments in India for over a month now since I started hearing murmurs of it in early March, but I guess better late than never to talk about it.

The Cat is Out of the Bag

Tiger Global Management, the NY-based American Investment Fund, has been quite active in India of late. Just last week, they participated in four investments in the country that would value each company over $1B dollar - CRED on April 6th, Groww on April 7th, ShareChat and GupShup on April 8th. What is also happening, which is less talked about, is that the investment firm is also targeting seed companies in the country and pre-empting their Series A rounds. Entrackr and TechCrunch scooped two such rounds in the last 2 months as Tiger Global attempts to lead Series A rounds in Plum Insurance and Kutumb (and I've heard there might be several more yet to be scooped & announced). And the reason why all this is happening in March and April could be because Tiger Global just closed a $6.7B fund!

Tiger Global has also had a fairly long relationship with India. It was back in 2010, when Lee Fixel (ex-Tiger Global Management) lead a $10M round into Flipkart - a company that it would ultimately invest over a $1B. Tiger made >$3.5B post the Walmart acquisition and still retains a stake. I think a lot of investors, both in India and globally, would say that Lee Fixel and Tiger really brought India back on the radar of a lot of other global investors at a time where no one else really saw the vision of India's emerging internet economy.

The thing about Tiger Global, though, is that the firm has been quite hot and cold with its investments in the country. Every cycle, it starts off being very aggressive and does a bunch of deals and investments for a couple of years and then goes dormant for a few years. The Indian market saw this when Tiger was very aggressive in 2014 and 2015 (according to Crunchbase, Tiger participated in 46 funding rounds), but then was fairly quiet in 2016, 2017 and 2018 having only participated in 12 funding rounds in those 3 years. The firm has certainly been active in 2019 and the early parts of 2020 but seems to have gotten even more aggressive in the last two quarters. Is it still yet to be seen how long Tiger truly will be active in the country given that historically India hasn't really generated a lot of returns for the firm.

But Tiger isn't alone in propping up the venture market in India. This by far has been the buzziest and busiest the industry has been since 2015, though there is a key difference this time around - we might actually get a couple of public exits in 2021. If 2019 and 2020 were years when Seed rounds in the country were exploding, 2021 certainly seems like the year where Series A and growth stage firms are chasing companies who are growing quickly and on a breakout trajectory and pre-empting future rounds. This isn't unlike the US, where the venture industry also seems to be quite insane at the moment thanks to ZIRP and firms not wanting to miss out on potential $100B outcomes.

Last year I was a bit skeptical with these massive seed rounds to see if Indian Series A firms and global growth firms would even follow-on, given the massive valuations that these companies sometimes need to grow into and at this point I would probably say I'm wrong given the continual flurry of activity- I have officially lost track of growth stage rounds and the number of unicorns in the country, which certainly wasn't the case just a couple of years ago.

Ultimately, the only thing that truly matters here is still generating actual cash on cash returns for these investors and hopefully we do see some of that this year. Upcoming IPOs for Zomato, Policybazaar and Nykaa seem hopeful and I'm sure someone or the other will end up getting SPAC'd. Though with a recycling of capital (from these public exits) and talent (people joining smaller companies or starting their own), we might just end up in an environment with even more companies being formed and even more rounds getting closed. This isn't necessarily a bad thing, I am just cautiously optimistic that we won't end up on the other side with no real exits and a repeat of the 2016 bust cycle as that could probably damage the India story as we look to recover from deadly pandemic.

For more pieces on Tiger Global, check out:

🗞️ News of the week

  • Meesho, the social commerce platform, announced it had raised $300M on Monday in a new financing round led by SoftBank's Vision Fund 2 which values the company at $2.1B. Meesho was one of the earliest Indian companies to go through YC and the current round includes previous backers Facebook, Prosus Ventures, Shunwei Capital, Venture Highway and Knollwood Investment.

  • Swiggy raises $800M in a round that values the company at $5B. The online food delivery platform has raised $800M in a round led by Falcon Edge , Amansa Capital, Think Investments, Carmignac and Goldman Sachs.

  • The popular investment app, Groww, announced today that it has raised $83M in a new financing round that would value the company upwards of $1B. The round was led by Tiger Global, and also saw the participation of existing backers in the likes of Sequoia Capital India, Ribbit Capital, YC Continuity and Propel Venture Partner.

  • ShareChat has raised $502M in a round led by Tiger Global, Lightspeed Venture Partners, Snapchat, Twitter and others.

  • Messaging Platform Gupshup has raised $100M in a round led by Tiger Global in a round that values the company at $1.4B. The company is over 15 years old and last raised capital in 2011, mostly because it hasn't needed to and has been profitable for a while.

  • Used car marketplace Spinny has raised a $65M Series C in a round led by General Catalyst with participation from Arena Holdings and Think Investments and existing backers Elevation Capital and Fundamentum Partnership.

📰 What we've read and listened to this week