In the investment world, some firms are known for their aggressive and bold tactics when deploying capital. One prominent example is Tiger Global Management, a New York-based hedge fund that has made waves in Silicon Valley with its rapid pace of investing and sky-high valuations. Tiger Global has rewritten the rules of venture capital by moving swiftly to fund startups at lofty prices, outpacing due diligence norms. Its investment strategy stands out for its speed, scale and willingness to take risks.
This article will examine Tiger Global’s exceptionally aggressive approach to tech investing. We’ll explore how its tactics have disrupted the norms of the VC industry and allowed Tiger to leave a significant imprint on Silicon Valley. The fund’s unrelenting investment cadence and unusually rich valuations reflect an investment strategy optimized for seizing opportunities in promising markets.
Tiger Global strikes startup deals at a blistering pace
When Tiger Global identifies a promising startup target, it moves with alacrity to seal a deal. The fund is known for dispensing with lengthy due diligence processes and completing contracts within days. This rapid pace allows Tiger to stay steps ahead of other investors and gain privileged access to the hottest startups. Between January and May 2021, Tiger Global funded 118 startups – 10X more than in the same period in 2020. It now holds stakes in over 400 startups. Tiger Global’s willingness to write checks extremely quickly is a cornerstone of its strategy.
Tiger Global pays premium valuations to edge out competitors
In addition to its swift execution, Tiger Global is also aggressive in its valuation approach. The fund routinely pays eye-popping sums for startup stakes that dwarf those of conventional VCs. For instance, when founders ask for investments of $80-90 million, Tiger Global has been known to unilaterally propose 9-figure checks instead. This tactic prices out competitors and secures privileged access for Tiger Global. Though risky, paying premium valuations aligns with Tiger’s strategy of cornering the most promising startup opportunities at any cost. The firm couples this approach with relentlessly contacting founders to offer more capital.
Tiger Global makes big, concentrated bets instead of diversifying
Whereas many funds look to diversify their portfolios across sectors and geographies, Tiger Global prefers to make bold, concentrated bets on high-conviction opportunities. For example, it poured enormous sums into Chinese e-commerce before Alibaba’s rise. And it has repeatedly doubled down on emerging leaders in hot sectors like fintech, cloud computing and consumer internet. This ‘eggs in one basket’ approach suggests a strategy optimized for outsized returns, even if it raises the specter of volatility. Tiger Global accepts swinging for the fences over diversification.
Tiger Global moves swiftly to reinvest gains from exits
When Tiger Global sells a successful portfolio company or takes it public, it rapidly redeploys the gains into new investments. The firm refers to this as ‘making our investment flywheel spin faster.’ Tiger Global’s willingness to recycle capital into fresh opportunities as soon as it materializes is yet another reflection of its aggressive, opportunistic strategy. Rather than taking time to assess options, Tiger’s default is to immediately plow proceeds from exits back into emerging private market leaders.
In sum, Tiger Global’s investment strategy in Silicon Valley and globally emphasizes speed, concentration, and paying premiums in order to secure positions in promising startups before anyone else. This fast-moving, undiversified approach suggests a high-risk, high-reward strategy optimized for outlier outcomes.