Having made a killing on the recent Walmart-Flipkart $16 billion deal, Tiger Global Management is once again looking to make fresh investments in India's startup ecosystem, after a gap of nearly three years. In fact, industry insiders say that it was the Lee Fixel-led fund's confidence in India - it had reportedly made over 40 early-stage investments after Flipkart - that had caused other global players to follow suit.
Citing people in the know The Economic Times reported that the New York-based hedge fund will now step up investments in India from its mega $3 billion fund called Tiger Global Private Investment Partners XI. "The new fund is expected to close in the next few weeks and India is specifically mentioned as one of the focus areas in the documents," said a source. The fund will also invest in other geographies, including US and China.
But Fixel is changing his strategy this time round. "Fixel is now looking at only growth-stage companies.. which have valuations of $200-250 million," the managing director of a venture capital firm, whose portfolio companies Fixel is scheduled to meet during his India visit later this year, told the daily. Tiger Global is now seeking to lead funding rounds starting from $30 million.
This is in contrast to Tiger Global's previous strategy of making a slew of $5-10 million investments in early-stage startups. Between late-2014 and end-2015, the firm had finalised 18 new investments, even as it poured more money into Flipkart and taxi-aggregator Ola, lifting its India exposure to $2 billion, but then it had suddenly stopped making new investments.
It had raised a $2.5 billion fund in November 2015 which focussed on companies in China, Latin America, the US, and the Middle East, but not India. That's because Fixel had come to believe that India's Internet economy was not growing as rapidly as that of China's. Some of the companies it invested in have shut, including Zopper, Localoye and Zo Rooms, while others such as Culture Machine, Little and Cube26 have struggled. Besides, questions over the fate of its investments in Flipkart and Ola back then forced Tiger Global to re-think its future investments in the country.
"Fixel has probably decided that he is not good at doing early cheques and it's better to find mature and fast-growing companies," the head of another early-stage venture capital fund told the daily. "The speed at which companies are reaching billion-dollar valuations shows that the market has changed and there is an inflection point."
So what kinds of companies are on Fixel's radar now? The buzz is that he is likely looking at new ecommerce companies, logistics tech startups, business-to-business commerce firms, and digital media/content ventures.
Interestingly, Tiger Global's renewed interest comes against the backdrop of an uptick in venture funding in the country. According to data from Tracxn, a startup research platform, investments across series A, B and C surged 60% to $1.6 billion across 165 deals in the first half of 2018 - up from the capital pool of $1 billion across 140 deals in the corresponding period of 2017.