Tiger Global's PIP 16 VC Fund Closes at $2.2 Billion, Falling Short of $6 Billion Target

Key Takeaway

• Tiger Global's latest VC fund, PIP 16, closed with $2.2 billion, falling 63% short of its $6 billion target amid a challenging fundraising environment.
• Leadership changes see founder Chase Coleman taking over the VC division after a significant markdown in portfolio valuations under Scott Shleifer's aggressive investment strategy.
• Despite setbacks, PIP 16 focuses on enterprise technology startups in the US and India, with Tiger insiders doubling their commitment to 20% of the fund's assets.

Fundraising Challenges

Tiger Global Management recently closed its latest venture-capital fund, Private Investment Partners 16 (PIP 16), with approximately $2.2 billion in capital. This amount falls significantly short of its initial $6 billion target, marking the firm's smallest fundraising effort in about a decade. This development is notable as it represents the first instance where a Tiger venture fund has attracted less investment than its predecessor. The previous fund, PIP 15, had amassed a record $12.7 billion, showcasing a stark contrast in investor enthusiasm. The fundraising environment has become increasingly difficult, with many investors adopting a cautious stance towards venture capital (VC) and private equity investments. This shift comes in the wake of declining valuations and a slowdown in deal activities, further compounded by firms' slow pace in returning cash to investors. Notably, other prominent firms such as Apollo Global Management Inc., Carlyle Group Inc., and Insight Partners have also faced challenges in meeting their fundraising goals.

Leadership and Performance

In a significant leadership change, Tiger Global announced that its founder, Chase Coleman, would assume direct control over the venture capital division, replacing Scott Shleifer, who transitioned to a senior adviser role. This move came after a period of aggressive investment strategies led by Shleifer, which, in the face of an industry downturn, resulted in the firm marking down its VC portfolio by 33% in 2022 and an additional 6% the following year. The PIP 15 fund, in particular, experienced an 18% markdown by the end of September, following valuation cuts across several portfolio companies. These developments underscore the challenges Tiger Global has faced in navigating the volatile venture capital landscape.

Strategic Focus and Investor Commitment

Despite the fundraising shortfall, PIP 16 aims to concentrate its investments primarily in enterprise technology startups, with a geographical focus on the United States and India. The fund plans to deploy its capital over several years, with Tiger insiders—traditionally the most significant contributors to their funds—increasing their stake to about 20% of PIP 16's assets. This increase from approximately 10% in recent funds indicates a heightened commitment from Tiger's internal stakeholders. The extended fundraising period for PIP 16, which lasted about 18 months, reflects the firm's efforts to accommodate investors following Shleifer’s transition and to address clients' internal budgeting needs.