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Tiger Global, hit by $17B in hedge fund losses, has nearly depleted its VC fund
- kolbe 4y agoMy guess is they're rapidly trying to deploy their capital before investors rescind their pledges. Once it's deployed, they can collect fees on it for decades.
- jacquesm 4y agoInvestors can't rescind their pledges that easily. Once committed if you do not honor a capital call there usually are pretty stiff penalty clauses for not fulfilling your obligations.
- kolbe 4y agoI know it's not easy, but generally the penalties are less than say investing in something that's 3x overvalued and will be locked up costing 3% a year in management fees for 15 years.
- jacquesm 4y agoInteresting, ok, I'm a party to two such agreements, I'll have a look to see what exactly would be the consequences in a case like that. I ran the figures when I made the commitment, basically wrote off the investment on day one because I see VC investing as a very advanced form of buying lottery tickets, it is so hit-and-miss that the only way to spread your risk is to have as wide a portfolio as possible but I never considered the scenario where a fund is so badly run that they will quite literally burn your cash. The funds I'm in are pretty respectable.
- kolbe 4y agoI lived the 2008 crisis, so maybe I'm overly pessimistic about investment managers from what I saw back then. But it seems to me that it's easy to appear respectable when everyone is making money, but true honor is tested in times like these. I mean, look at Melvin, right? He was a wunderkind of how to do things right until he lost some money, and now he's threatening to close his fund and immediately launch a new one, just so he can reset his high water mark. I got a call once from a VC fund manager who wanted to buy some private stock I owned well over the recent raise price, because he had unused cash left over that would otherwise go undeployed. There's just all sorts of slimy things that happen, and Tiger deploying tons of cash into deals that no one else except Insight will do looks a little skeptical.
- jacquesm 4y agoThese are excellent points and I will definitely act on them. Thank you for the wake up call. Fortunately the amounts involved are modest (a few hundred K) but still it is a thing to be more aware of. Another bit of good news is that I am close enough to the fund managers that I can see what they are up to and I have not seen any 'false moves'. But it would still be a very good idea to refresh my knowledge of the various obligations and how the terms might be abused. On the plus side, some of the people on the LP side are heavyweights that would likely be able to make a significant problem for the fund managers if they ever mis-stepped.
- calculatorway 4y ago[dead]
- greatpostman 4y agoGuaranteed the guys running that fund made hundreds of millions if not more, even crazier is a lot of that money is probably people’s pension funds. Hope you’re happy to pay for someone’s yacht!
- cmeacham98 4y agoIs your point that head fund managers only deserve to get paid if they are successful? Or are you trying to insinuate Tiger Global's managers were negligent/reckless with the money?
- pc86 4y agoI think they're point out that when you're making millions of dollars a year you have an incentive to get a little reckless to try to eek out better and better returns. Sure you want to keep the gravy train moving, but if you're worth $50 million, and you the have the choice between playing it safe for $2 million, or rolling the dice and maybe making another $50... you're probably not going to be dissuaded because it's a pension fund's money. You've already got yours so what's the worst that can happen?
- cmeacham98 4y agoDo you have actual reason to believe Tiger Global did this, or this all baseless speculation?
- your_username 4y agoTiger Direct is a retailer. I think you mean Tiger Global Management.
- cmeacham98 4y agoI did, my bad. A lot of your comments are marked dead (I vouched for this one), you might be shadowbanned.
- algoatecorn 4y agoFor anyone interested in further reading: https://www.wsj.com/articles/tiger-global-closes-on-12-7-billion-for-latest-growth-fund-11647626626 https://www.wsj.com/articles/tiger-global-closes-on-12-7-bil... https://en.wikipedia.org/wiki/Tiger_Global_Management https://en.wikipedia.org/wiki/Tiger_Global_Management
- jallmann 4y agoThis article is also a good explainer for Tiger's high-velocity capital deployment strategy - https://randle.substack.com/p/playing-different-games https://randle.substack.com/p/playing-different-games
- deleted 4y ago[deleted]
- Despegar 4y agoThe tech recession is going to be great for Apple's back to the office plans.
- 3a2d29 4y agoAt the risk of turning this entire comment section into RTO debate, I want to sorta second this. RTO will be so much easier when the job market is flooded with failed start-up engineers and the tech industry cools off.
- lamontcg 4y agoThey're much more concerned with unionization and wage increases further down the economic ladder. Tech worker RTO isn't their primary concern.
- ThrowawayR2 4y agoIt'll be great for every business's back to office plans. If we really are entering a major tech downturn, employers are going to be in the driver's seat in a way that will have the HN "I would never ever work for a corporation that requires in-office/leetcode/etc." crowd reeling.
- kadoban 4y agoSmart corps should have realized by now that offices are a huge, mostly unnecessary cost. There will be a bunch of places not forcing RTO.
- ThrowawayR2 4y agoSmart corps should have realized by now that open office spaces are disliked by employees, are noisy, etc. Looks like there aren't very many smart corps...
- kadoban 4y agoTrue. But the difference here is that the corp directly and immediately benefits, by reduced costs. It's easier to be smart if it means more money in your pocket. Cost is probably part of why open offices were a thing anyway, reduced costs and more flexibility. So incentives are aligned with WFH, but weren't with open office bullshit. That should be the difference here.
- athinggoingon 4y agoThese are Tiger Global's top 10 holdings at the start of 2022: ServiceNow, Sea Limited, Microsoft, JD.Com, CrowdStrike, Carvana, Facebook, DoorDash, Snowflake, Nu Holdings
- 2arrs2ells 4y agoThat looks like holdings for their public equities fund. The article is about their venture fund, a separate vehicle.
- 99_00 4y agoThe loses are from their hedge fund. The article is about the venture funds and hedge fund.
- athinggoingon 4y agoAnd they charge 1.5% per year of the net assets to invest your money in these stocks.
- pc86 4y agoNo, they don't. It's a separate entity.
- kolbe 4y agoThey actually charge 3/30
- JumpCrisscross 4y ago> they charge 1.5% per year of the net assets to invest your money in these stocks This varies wildly LP to LP. These numbers are negotiated case by case.
- newaccount2021 4y ago
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- snake_doc 4y agoUsually love Connie’s writing, but this is a pretty bad headline. It’s factual, but conflating 2 facts that are not casual. Tiger didn’t deplete their VC fund because of their hedge fund losses, that would be an incorrect understanding. The funds are insulated from another. Tiger simply deployed a lot of their VC fund already, hence depleted. Separately , Tiger—like SoftBank— levers their VC funds, so it’ll be interesting at which point JP Morgan and other underwriters start calling in the margin if private stakes are written down. FT direct source for hedge fund losses: Tiger Global hit by $17bn losses in tech rout https://on.ft.com/37uCacr https://on.ft.com/37uCacr
- jjtheblunt 4y ago> that are not casual typo: casual -> causal ?
- deleted 4y ago[deleted]
- KMag 4y agoI wonder how much auto-correct is going to cause relatively rare words with a small edit distance from common words to slowly leave the English language.
- i67vw3 4y agoBritish english will become extinct in few years due to American english based auto-correct which is enabled by default on all systems when you opt-in into auto-correct feature.
- jonathankoren 4y agoautocorrect
- i67vw3 4y agoWas on mobile, corrected the word.
- geodel 4y agoHuh, few months back this [1] was shared here[2] and also this[3] The import was Tiger is somehow playing investment game at totally different level. And they are totally upending whole VC model with their speed of investment and little due diligence. It definitely felt a whole lot of bullshit to me. 1. https://www.readthegeneralist.com/briefing/tiger-global https://www.readthegeneralist.com/briefing/tiger-global 2. https://news.ycombinator.com/item?id=29296904 https://news.ycombinator.com/item?id=29296904 3. https://randle.substack.com/p/playing-different-games?s=r https://randle.substack.com/p/playing-different-games?s=r
- AlexandrB 4y agoLoved this from [3]: > On the contrary, we are seeing the emergence of a new velocity-focused strategy in the venture/growth3 asset class that will fundamentally change the way that venture capital is raised. Or, and I'm just spitballing here, capital was cheap because interest rates have been at all time lows for years. You only find out which one it is when interest rates start to go up.
- Proven 4y ago
- antupis 4y agoTiger probably did get pretty good managment fees so they are not losers here.
- geodel 4y agoYeah, I mean if they are burning whole lot of dumb money, it can be good in a way.
- bps4484 4y agoWeirdest quote the TC article was "In the meantime, Tiger Global, which prides itself on its due diligence" They are notorious for outsourcing their due diligence and often not even paying attention to it. They pride themselves on moving fast, not diligence. I liked the investment thesis of "get founders money and get out of their way" and hopefully other VCs learned something from it, but they certainly lacked a lot of control in how they operated.
- deleted 4y ago[deleted]
- kodah 4y agoCan someone explain to me what this means for startups where Tiger Global is an investor? Edit: It's a genuine question. I was planning on interviewing at one of the startups where they're an investor.
- lordnacho 4y agoMore risk as they might not reinvest in the startup, which is not a good signal for other potential investors. Normally you want to get another ticket from the main investor for the next round. Having said that it's not like the firms are doomed, they might still get other money or even make money themselves.
- JumpCrisscross 4y ago> what this means for startups where Tiger Global is an investor? On average, a lower next-round valuation and layoffs as burn is reduced (on account of Tiger no longer being around to juice the next round).
- jfkimmes 4y agoI can't see the article because it redirects to (through?) a blacklisted tracking domain: https://guce.advertising.com/collectIdentifiers https://guce.advertising.com/collectIdentifiers. Super strange UX. But I guess this will become more prevalent with trackers, to avoid being a "3rd party" provider.
- golergka 4y agoDidn't they have a lot of Russian tech in their portfolio as well?