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Will unicorn minters Tiger Global, SoftBank now focus on early-stage startups in India?

Will unicorn minters Tiger Global, SoftBank now focus on early-stage startups in India?

Tiger Global, SoftBank have invested in 8 seed stage startups in India, Tracxn data shows

(representational image) (representational image)

Earlier this week, New York hedge fund, Tiger Global reported its first seed stage investment in India by participating in a 2.6 million seed round of Shopflo, an e-commerce enablement platform.  

However , data sourced exclusively by Business Today from research firm, Tracxn showed that Tiger which is popular for writing big cheques for firms globally has invested in 7 seed stage startups in India across eight rounds till date. 

SoftBank, on the other hand has invested in only one seed stage startup in India across two rounds, as per Tracxn data.  The total funding across various seed stage rounds by both the investment majors is over $10 million. 

Tiger Global has also been fairly active in other early stage fund-raises in Indian startups, backing 64 such companies. On the other hand, SoftBank till now has invested in only 2 early-stage startups in India, the Tracxn data revealed. 

Will Tiger Global, SoftBank’s focus shift back on early-stage funding rounds? 

In early half of the last decade, when the Indian internet companies were yet to take off, Tiger’s participation in seed, Series A stages was very prevalent. However, the fund has been aggressively writing huge cheques and minting unicorns in India especially in the last two years. But analysts feel, Tiger may move back to participating in small size transactions especially as global markets are experiencing a downturn, and tech stocks have been tumbling. Tiger Global according to various media reports which quoted analyst firm, LCH Investments has lost two-thirds of its cumulative gains amounting to $17 billion since last year in the face of major tech rout that its portfolio firms saw during this period. 

Graphic credit: Pragati Srivastava

SoftBank as well has laid out that it will stay in defense mode when it comes to writing big cheques and will scale down its investments across portfolio companies. The Japanese tech investment firm posted a record $13 billion loss in FY22 with the fair value of some of its portfolio companies including India’s Paytm and Policy Bazaar declining by more than half during the last quarter of FY22. Softbank had invested $1.4 billion in Paytm, which has a fair value of $800 million, now whereas an investment of $400 million in PB Fintech (PolicyBazaar’s parent firm) has a fair value of $100 million currently. 

Both the VC firms ploughed in nearly 4 billion in $Indian startups in 2021, data collated from Venture Intelligence showed. While Tiger Global participated in as many transactions investing 2.2 billion, SoftBank poured in 1.57 billion across Indian startup ecosystem last year. 

Despite robust large deal-making last year, Indian startups saw a dent in big-ticket transactions which accounted for 63% share of the fund-raising in Q1, CY21, the proportion of these transactions (with a deal size of $100 million and above) was 58% for Q1, CY22. The report further said that 81 % of the funding activity was driven by early-stage and growth-stage deals. 

As the unicorn minters like Tiger Global, SoftBank go slow on their investment radars, the industry watchers say it is the seed–stage/ Series A stage companies that could benefit from the overall market sentiment. 

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