With 15 Indian startup funding deals in 2021, Tiger Global takes a big leap of faith
If 2019 saw the return of American hedge fund Tiger Global in the Indian startup ecosystem after a three-year lull, then 2021 appears set to cement its position once again among the top investors in India.
In the first half of 2021, Tiger Global has been aggressively cutting cheques for investments into Indian startups, participating in 15 deals worth $1.74 billion (co-led with other investors), according to YourStory Research.
That’s already higher than the number of deals it led in the whole of 2020 when Tiger participated in or led investments into 13 deals worth $1.32 billion.
In fact, experts believe that if Tiger Global continues in the same trajectory, it may even cross the quantum of deals it made in India in 2015 (35 deals worth $2.19 billion).
Image credit: Manash
Just last week alone, Tiger Global has invested in four Indian startups as a part of Series B funding of $70 million in jobtech startup Apna, $42 million Series C funding in vehicle services platform GoMechanic, $25 million Series B funding in fintech platform ProgCap, $26 million Series A funding in the Bharat focussed social community app platform Kutumb.
Unicorns of 2021 and beyond
To be clear, in a year that has seen a record number of new unicorn additions — 15 so far in the first half of 2021, Tiger Global has invested in at least six of these startups that have recently earned the $1 billion or higher valuation.
They include healthtech startup Innovacer, B2B construction platform Infra.Market, fintech startup Groww, messaging tech startup Gupshup, Indian language social media platform ShareChat, and SaaS Startup Chargebee.
“It is great for the startup ecosystem with growth capital (from investors like Tiger) flowing in as the founders can scale their business rapidly. The valuations look glamorous in the media, but underneath they are structured investments with exclusive rights for downside protection,” says Sanjay Mehta, Founder and Partner, 100X.VC.
He expects at least 25 new unicorns to be created in the Indian startup ecosystem in the next two years, with at least half of them likely to be backed by Tiger Global.
Indeed, 2021 is expected to see the Indian startup ecosystem record new highs in overall investments into the space, as the total startup funding amount raised in just the first six months of 2021 is already at levels seen for the whole of last year.
Social media platform ShareChat, which is among the recently minted unicorns of 2021, raised over $502 million from Tiger Global and Lightspeed Ventures with participation from Snap Inc and Twitter, among others.
Tiger also co-led the Series G round in SaaS startup Chargebee with Sapphire Ventures and Insight Venture Partners, and led the Series C round in Infra.Market.
“Tiger Global today resembles a wishing well for both founders and early-stage investors like 100X.VC fund. While they are playing Santa Claus with their audacious bets, they are very smartly picking deals only with momentum in diverse sectors, and with volume scale, which is very similar to how 100X.VC invests at the seed stage,” adds Sanjay Mehta of 100X.VC.
From 2015 until the first half of 2021 (despite the three-year lull in 2016, 2017, and 2018), Tiger Global has led or participated in 135 deals worth $20.03 billion in Indian startups, in a period in which it also saw the big exit from Flipkart after Walmart acquired the Indian ecommerce major in 2018.
(Graphic credit: Tenzin Pema)
Diversity in startup investments
Still, this time around, a major difference has been in the diversity of sectors and stages of startups Tiger is choosing to invest in.
Tiger has invested in startups at different stages as well. It has made one early-stage investment in insurance tech startup Plum. It has also made six investments in growth-stage startups like Infra.Market, Crypto startup, CoinSwitch, Koo, ProgCap, and Apna, and seven late-stage startups like Zomato, CRED, Groww, ShareChat, Pristyn Care, Urban Company, and Moglix. It has also invested in Urban Company in two tranches.
Tiger made its first investment of $70 million in job tech startup Apna along with other investors such as Insight Partners.
Similarly, it has also participated in funding deals worth $348 million in four startups in the fintech sector, two deals worth $220 million in ecommece startups, two deals worth $255 million in the logistics space, two deals worth $532.2 million in the social media and content space, and one deal worth $42 million in GoMechanic in the automotive space. It also invested $250 million in foodtech major Zomato, and one healthcare deal of $53 million in Pristyn Care.
“If you take the sectors Tiger has invested in, it is the story of India today. For example, due to the pandemic, sectors like edtech, jobtech, and fintech, are now on a roll. These are mostly direct-to-consumer (D2C) players offering services. These are large pan-India plays that can go outside India,” says Sanjay Anandaram, investor and startup mentor.
These startups, Anandaram explains, are targeting a large market and enjoy a set of enabling conditions today in India that makes it easier for them to grow and scale globally.
Tiger Global has also added significant dry powder, which gives it the power to sign multiple cheques. According to an SEC filing by Tiger Global in April this year, the fund that was looking to raise $3.75 billion for its XIV (13th Fund) raised twice the amount of $6.65 billion.
It doesn’t stop here. The hedge fund closed its Fund 12 with $3.75 billion in capital commitments.
Risk Vs Rewards
And yet, analysts and investors believe there are risks associated with Tiger Global’s aggressive investments into the Indian startup ecosystem.
“Historically, we have seen that when Tiger invests in a startup in a particular space, other startups find it hard to raise capital. There is a belief that the winner is picked and others don’t want to pump in more money,” says one investor who spoke on the condition of anonymity.
Others believe follow-ons may be “a big question” if they keep investing at the current pace. And yet others believe that a sudden Tiger Global exit from the market can also hurt overall sentiment.
Nevertheless, an analysis of Tiger Global's investment activity into the Indian startup ecosystem so far this year suggests it is more bullish than ever on Indian startups. And that, in fact, the year may see it maintain the aggressive pace at which it has been investing in Indian startups this year.