Tiger Global Management, a New York-based investment firm, is reportedly looking to sell off hundreds of millions of dollars worth of private companies in the secondary market. According to sources familiar with the matter, the majority of the firm’s assets are in startups, with investments in hundreds of venture-backed companies, including ByteDance, Snyk, Discord, Chime, and Stripe, which was founded by Irish brothers John and Patrick Collison. The Financial Times reported on Sunday that Tiger Global has hired an adviser to explore options for selling a portion of its assets.
The move comes as Tiger Global, like many of its peers, is facing one of the most challenging periods that venture investors have seen in years. In recent years, investors have poured money into splashy startups, driving up their valuations, only to experience a tech swoon last year. Tiger Global marked down its venture investments by about 33% in 2019, resulting in a $23bn decline in value. Now, with fewer companies going public, investors are turning to the secondary market to find an exit. They may seek liquidity for several reasons, including providing distributions to clients, funding add-on investments to existing portfolio companies, or divesting from companies they don’t believe will bounce back fast enough.
Tiger Global has not commented on the reports. The investment firm managed $51bn (€47bn) at the beginning of the year and has been a major player in the startup world, with a reputation for making big bets on promising young companies. The firm’s founder, Chase Coleman, is known for his early investments in companies like Facebook and LinkedIn. However, the recent downturn in the market has hit Tiger Global hard, and the firm is now looking for ways to recover its losses.
The secondary market has become an increasingly popular way for investors to exit their positions in private companies. In recent years, companies have been staying private for longer, and many of them have been able to raise large amounts of capital without going public. This has created a backlog of private companies that investors are looking to sell, and the secondary market has emerged as a way to provide liquidity to these investors. The market allows investors to sell their shares to other investors, providing an exit without the need for an IPO.
While the secondary market can be a good option for investors looking to exit, it can also be risky. The market is largely unregulated, and there is often limited information available about the companies being traded. This can make it difficult for investors to accurately value their holdings and can lead to unexpected losses. However, for investors like Tiger Global, who are looking to recover losses from a difficult year, the secondary market may be the best option available.