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Tiger Global had a very cool 2022 - Financial Times

Reported by Ft
Mar 17, 2023· 2 min read
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Key Takeaways
  • • Tiger Global marked down private company investments by approximately 33% across its venture-capital funds in 2022, reflecting severe portfolio deterioration in the asset class during the year.
  • • The hedge fund's 2022 performance was devastating, with portfolio losses exceeding 50% and total losses reaching $17 billion, followed by a 14% decline in May 2023 during the technology sector sell-off.
  • • Tiger Global rebounded sharply in Q1 2023, posting a 7.3% gain as technology shares rallied, signaling early recovery momentum after the humbling 2022 performance.
  • • The firm dramatically reduced deal activity, declining from over 300 venture deals in 2022 to approximately 40 deals in 2023, reflecting a strategic pullback and more disciplined investment approach.
  • • Tiger Global successfully raised $2.2 billion for its latest venture fund despite operating in a challenging fundraising environment, demonstrating investor confidence in management's rebuilding strategy.
Summary
Tiger Global Management endured one of the most difficult years in its operational history during 2022, with its hedge fund suffering portfolio losses exceeding 50% and total losses of $17 billion. The firm marked down the value of its private company investments by approximately 33% across its venture-capital funds, reflecting the broader collapse in venture valuations and technology sector weakness that characterized 2022. The losses were particularly acute in May 2023, when the fund dropped an additional 14% during the technology sell-off, underscoring the fund's significant exposure to technology-related assets.

The firm's aggressive venture-capital deployment strategy proved catastrophic during this period. Tiger Global transitioned from striking over 300 venture deals in 2022 to just 40 deals in 2023, representing a dramatic 87% reduction in deal activity. This retrenchment reflected both depleted capital and a fundamental recalibration of the firm's investment thesis. The portfolio included significant exposure to Web3 companies and non-fungible token platforms, including positions in Bored Ape Yacht Club (BAYC) and OpenSea, which faced severe markdowns as cryptocurrency and digital asset valuations collapsed.

Despite these setbacks, Tiger Global demonstrated resilience in early 2023. The hedge fund gained 7.3% in the first quarter as a technology sector rally provided near-term relief. More significantly, the firm successfully raised $2.2 billion for its latest venture fund, a achievement notable for occurring in a difficult fundraising environment where limited partners remained skeptical of venture capital after 2022's downturn. This capital raise suggested that despite the humbling performance, institutional investors retained sufficient confidence in management's ability to execute a rebuilding strategy and navigate back to profitability. As Tiger Global approached its 25th anniversary, the firm signaled its intention to move beyond 2022's losses and return to disciplined investment fundamentals.

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Sources

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Ft Tiger Global had a very cool 2022 - Financial Times