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Tiger Global's Biggest Venture Fund Has 18% Loss After Markdowns

34 points by chewz 3y ago

asylteltine 3y ago
So?
- TacticalCoder 3y ago
  Well this site is about tech and things aren't going so well for many new tech ventures lately, as seen in this other article which made frontpage today too: "Startups weather a dismal year – 543 have declared bankruptcy or shut down": https://news.ycombinator.com/item?id=38497944 https://news.ycombinator.com/item?id=38497944
  - asylteltine 3y ago
    So maybe that context should be in that title or something
shin_lao 3y ago
Most funds lose money. It's rare for a fund to do better than the DJIA.
- blantonl 3y ago
  I think you meant the S&P 500 The DJIA is a relatively meaningless index and is only around for it's historical significance, if anything.
  - lokar 3y ago
    This bothers me so much. I wish the news would stop reporting on the Dow
    - ghaff 3y ago
      They do track not terribly but I don't really disagree.
tillvz 3y ago
https://archive.is/oHh8V https://archive.is/oHh8V
civilitty 3y ago
The dirty (open?) secret is that most software tech VCs are absolutely awful at their jobs. Just completely useless except as glorified rolodexes. It’s not like biotech where they’re forced to face their ignorance head on, software allows them to coast on weapons grade bullshit until the chickens come to roost (conveniently after the second fund has been raised). Even the big guys who have the clout to be consistently at the front of the line for the best deals like Sequoia are just fools with more money who invest in absolute disasters like SBF without a shred of due diligence. If biotech investors were this dumb we’d still be shooting up snake oil at the dentist’s office. The tide coming out with interest rates will hopefully reshuffle the industry.
- blantonl 3y ago
  Biotech isn't immune to weapons grade bullshit. Theranos enters the chat and would like to have a word.
  - civilitty 3y ago
    > Theranos enters the chat and would like to have a word. Theranos is the perfect case in point: no biotech VC invested in Theranos. Not a single one. They avoided it like the plague because anyone who did any due diligence knew that using blood from a finger prick for accurate diagnostics was a physical impossibility. The list of Theranos investors is all "dumb money" like Rupert Murdoch, Betsy DeVos (that Betsy DeVos), Larry Ellison, Robert Kraft, and the Walton family among others.
zht 3y ago
surprised it's only 18% given the meltdown that's happened in tech
- ghaff 3y ago
  2000 or so would like a word with you. "Tech" hasn't really melted down even if there have been layoffs, it's harder to find new positions, and a lot of crappy startups have shutdown. Dot-bomb was an absolute nuclear winter by comparison. (May still happen of course but probably not.)
- xenospn 3y ago
  What meltdown? There’s a top post on this site with hundreds of companies hiring.
  - ghaff 3y ago
    Meltdown is certainly an overstatement (at this point). Not that that is much consolation to people who have lost their jobs and are having trouble finding a new one or those whose RSUs are worth a whole lot less than they were.
blantonl 3y ago
We have reached a point in our industry where it is a race to the bottom for tech startups. Cloud computing, language frameworks, and other SAAS offerings have resulted in the vast majority of "startups" these days just being a group of people putting legos together, packaging it up, and raising money as "the next best 'x'" when a,b,c,d,e,f,g already exists. It is no longer going to be feasible for a Stanford/Harvard college drop-out to be able to bolt together 15 different SAAS offerings into a package and tell investors THIS will change the world.
- pcarolan 3y ago
  People will always be willing to pay for great products that solve problems. I think the hype dying down will be good for everyone.
- spamizbad 3y ago
  How many lego-brick-assembly startups actually had large exits before they transitioned into something more sophisticated? Seems like a bunch of those types raised big and then basically became zombies slowly burn their cash pile, but every savvy potential acquirer recognized they could roll their own for much less than their desired acquisition price. And those that didn't matured/pivoted/whatever into something that could not simply be written off as lego-bricking solutions.
kozikow 3y ago
Surprised it's just 18%. 2021 was a height of "more money on the market than productive things to do with it". Startups are expected to operate in 2-year fundraising cycles - VCs used to push you to increase burn rate if you had a longer runway.... So right now startups that raised at the top of 2021 are facing potential fundraising now. The equivalent company would have 2-3x lower valuation in 2023 compared to 2021 - based on my discussions with other founders, what board members say, etc.
- pcarolan 3y ago
  It’s likely a lot more more. These are the markdowns they have to make. They’re hoping the rest will come back but many won’t.
cs702 3y ago
...based on valuations determined by none other than Tiger Global. If you think those valuations are 100% objective, I have a bridge to sell you. No one wants valuations to come down: * VC firms don't want to write down their portfolios aggressively, because doing so will make raising the next fund much more difficult. * Institutional LPs don't want VC firms to write down holdings either, because they themselves want to show good performance too. * Portfolio companies never want to raise money at lower valuations than the last round's, suffering dilution, unless they absolutely have no better choice.
- yterdy 3y ago
  I think most people would find it chilling to discover how many things are "valued" principally by the owners or potentially compromised appraisers - and how often these values are accepted by banks and the government for material decisions (e.g., how much margin to extend). It's going to get wild when someone has to sell and actual offers start rolling in.
  - landedgentry 3y ago
    Reminds me of that scene in The Big Short where the price stayed constant and was not marked down, even though the world was collapsing around them. Heh.
  - zie 3y ago
    This is normal, requiring an independent audit every time you want to do your books is just not practical. There is a certain amount of grift expected here, 10% or so either direction, it's not big deal. It is illegal though when you start reporting to the government on those valuations, and they get wind of you radically altering the valuations. Trump is in the middle of this fight right now, and he's not alone in getting in trouble for it.
    - yterdy 3y ago
      >requiring an independent audit every time you want to do your books is just not practical. Maybe they should take those exorbitant profits and do them anyway. "That would put a ceiling on wealth accrual," you say? Good.
kaycebasques 3y ago
> The nearly $13 billion Private Investment Partners 15 fund... cut its valuation for privacy search engine platform DuckDuckGo by 72% Surprised to see DDG in Tiger's list of investments. Should I view that as just part of the broad markdown or has something changed to DDG in particular that makes its biz model less viable?

34 points by chewz 3y ago

asylteltine 3y ago

So?

TacticalCoder 3y ago
Well this site is about tech and things aren't going so well for many new tech ventures lately, as seen in this other article which made frontpage today too: "Startups weather a dismal year – 543 have declared bankruptcy or shut down": https://news.ycombinator.com/item?id=38497944 https://news.ycombinator.com/item?id=38497944
- asylteltine 3y ago
  So maybe that context should be in that title or something

shin_lao 3y ago

Most funds lose money. It's rare for a fund to do better than the DJIA.

blantonl 3y ago
I think you meant the S&P 500 The DJIA is a relatively meaningless index and is only around for it's historical significance, if anything.
- lokar 3y ago
  This bothers me so much. I wish the news would stop reporting on the Dow
  - ghaff 3y ago
    They do track not terribly but I don't really disagree.

tillvz 3y ago

https://archive.is/oHh8V https://archive.is/oHh8V

civilitty 3y ago

The dirty (open?) secret is that most software tech VCs are absolutely awful at their jobs. Just completely useless except as glorified rolodexes. It’s not like biotech where they’re forced to face their ignorance head on, software allows them to coast on weapons grade bullshit until the chickens come to roost (conveniently after the second fund has been raised). Even the big guys who have the clout to be consistently at the front of the line for the best deals like Sequoia are just fools with more money who invest in absolute disasters like SBF without a shred of due diligence. If biotech investors were this dumb we’d still be shooting up snake oil at the dentist’s office. The tide coming out with interest rates will hopefully reshuffle the industry.

blantonl 3y ago
Biotech isn't immune to weapons grade bullshit. Theranos enters the chat and would like to have a word.
- civilitty 3y ago
  > Theranos enters the chat and would like to have a word. Theranos is the perfect case in point: no biotech VC invested in Theranos. Not a single one. They avoided it like the plague because anyone who did any due diligence knew that using blood from a finger prick for accurate diagnostics was a physical impossibility. The list of Theranos investors is all "dumb money" like Rupert Murdoch, Betsy DeVos (that Betsy DeVos), Larry Ellison, Robert Kraft, and the Walton family among others.

zht 3y ago

surprised it's only 18% given the meltdown that's happened in tech

ghaff 3y ago
2000 or so would like a word with you. "Tech" hasn't really melted down even if there have been layoffs, it's harder to find new positions, and a lot of crappy startups have shutdown. Dot-bomb was an absolute nuclear winter by comparison. (May still happen of course but probably not.)
xenospn 3y ago
What meltdown? There’s a top post on this site with hundreds of companies hiring.
- ghaff 3y ago
  Meltdown is certainly an overstatement (at this point). Not that that is much consolation to people who have lost their jobs and are having trouble finding a new one or those whose RSUs are worth a whole lot less than they were.

blantonl 3y ago

We have reached a point in our industry where it is a race to the bottom for tech startups. Cloud computing, language frameworks, and other SAAS offerings have resulted in the vast majority of "startups" these days just being a group of people putting legos together, packaging it up, and raising money as "the next best 'x'" when a,b,c,d,e,f,g already exists. It is no longer going to be feasible for a Stanford/Harvard college drop-out to be able to bolt together 15 different SAAS offerings into a package and tell investors THIS will change the world.

pcarolan 3y ago
People will always be willing to pay for great products that solve problems. I think the hype dying down will be good for everyone.
spamizbad 3y ago
How many lego-brick-assembly startups actually had large exits before they transitioned into something more sophisticated? Seems like a bunch of those types raised big and then basically became zombies slowly burn their cash pile, but every savvy potential acquirer recognized they could roll their own for much less than their desired acquisition price. And those that didn't matured/pivoted/whatever into something that could not simply be written off as lego-bricking solutions.

kozikow 3y ago

Surprised it's just 18%. 2021 was a height of "more money on the market than productive things to do with it". Startups are expected to operate in 2-year fundraising cycles - VCs used to push you to increase burn rate if you had a longer runway.... So right now startups that raised at the top of 2021 are facing potential fundraising now. The equivalent company would have 2-3x lower valuation in 2023 compared to 2021 - based on my discussions with other founders, what board members say, etc.

pcarolan 3y ago
It’s likely a lot more more. These are the markdowns they have to make. They’re hoping the rest will come back but many won’t.

cs702 3y ago

...based on valuations determined by none other than Tiger Global. If you think those valuations are 100% objective, I have a bridge to sell you. No one wants valuations to come down: * VC firms don't want to write down their portfolios aggressively, because doing so will make raising the next fund much more difficult. * Institutional LPs don't want VC firms to write down holdings either, because they themselves want to show good performance too. * Portfolio companies never want to raise money at lower valuations than the last round's, suffering dilution, unless they absolutely have no better choice.

yterdy 3y ago
I think most people would find it chilling to discover how many things are "valued" principally by the owners or potentially compromised appraisers - and how often these values are accepted by banks and the government for material decisions (e.g., how much margin to extend). It's going to get wild when someone has to sell and actual offers start rolling in.
- landedgentry 3y ago
  Reminds me of that scene in The Big Short where the price stayed constant and was not marked down, even though the world was collapsing around them. Heh.
- zie 3y ago
  This is normal, requiring an independent audit every time you want to do your books is just not practical. There is a certain amount of grift expected here, 10% or so either direction, it's not big deal. It is illegal though when you start reporting to the government on those valuations, and they get wind of you radically altering the valuations. Trump is in the middle of this fight right now, and he's not alone in getting in trouble for it.
  - yterdy 3y ago
    >requiring an independent audit every time you want to do your books is just not practical. Maybe they should take those exorbitant profits and do them anyway. "That would put a ceiling on wealth accrual," you say? Good.

kaycebasques 3y ago

> The nearly $13 billion Private Investment Partners 15 fund... cut its valuation for privacy search engine platform DuckDuckGo by 72% Surprised to see DDG in Tiger's list of investments. Should I view that as just part of the broad markdown or has something changed to DDG in particular that makes its biz model less viable?