Tiger Global, hit by $17B in hedge fund losses, has nearly depleted its latest VC fund

Tiger Global is a year old.

According to a new report from Financial Times, the 21-year-old outfit has seen losses of about $17 billion during this year's tech stock sell-off. One of the biggest dollar declines for a hedge fund has been reported by the FT.

According to the calculations of a fund of hedge funds run by the Edmond de Rothschild Group, Tiger Global's hedge fund assets have been so hard hit that the outfit has in four months erased about two-thirds of its gains. It's over.

The firm's venture business has ballooned rapidly in recent years, and the question is whether that trouncing will affect it. The firm closed its twelfth venture fund in 2020. It closed its 13th venture fund with $6.65 billion before closing its newest fund, fund XV, with $12.7 billion in capital commitments in March of this year.

A source close to the firm says that the new fund is almost fully invested.

It's not surprising that Tiger Global has put so much money to work already. In the first quarter of this year, it was ahead of every other investor, despite adding 118 companies to its portfolio last year.

The rounds were not small until earlier this year. Commonwealth Fusion Systems received a Series B investment from Tiger Global in December. It led a $600 million Series D round for the electric vehicle company Nuro.

In the first quarter of this year, it led 78 deals, including a $768 million Series E round for Getir and a $530 million Series D round for Qonto.

It's not even June, but $12.7 billion is a lot of money.

How much money Tiger Global can raise for its next fund, and when, was the question begged.

The firm has soft commitments in place based on its recent performance. At the end of the first quarter of this year, the firm's private portfolio funds had generated a 25% net IRR, according to a letter to investors obtained by the website.

In the first quarter of this year, the value of the funds decreased by 9%, following an increase of 54% in 2021.

According to the investor letter, Tiger Global boasted of stakes in 38 companies that went public last year and distributed $3.7 billion to investors.

There is hardly a better time to raise another enormous venture fund. The stock portfolio of almost every institutional investor has been hammered. It isn't like venture firms set aside money inside a giant piggy bank, they call down committed capital from their investors as they need it.

The process allows VCs to begin the clock on each investment as soon as a check is written, but it also subjects them to extreme market volatility. University endowments, pension funds and other institutional investors will not fulfill their capital obligations if public company shares start to nosedive.

As their public market portfolios shrink, these same institutions pull back from their new fund commitments. They are supposed to meet their targets to ensure that they are sufficiently diversified.

If the market doesn't bounce back, current trends will begin impacting everyone and Tiger Global's performance could prove difficult.

It has a less strong case to make. The hedge fund investors who invested at Tiger Global have made more than 20 times their initial investment. They would have received a double return if they had invested in the S&P 500 over the same period.

Tiger Global's venture bets could go sideways if the market for exits doesn't improve.

Tiger Global was aware of what was about to happen. The Information reported in February that the team, which works as one unit to make both hedge fund and venture bets, had all but abandoned late-stage venture deals.

When the share price of publicly traded tech companies fell, it was inevitable that some of those giant rounds would be pulled out.

It's easy to wonder if Tiger Global's strategy shift to earlier-stage startups has come too late. Tiger Global's venture bets can be judged after some time, unlike with its hedge fund business. The firm has historically enjoyed some big venture wins.

Tiger Global may be celebrating a separate apparent win right now. It passed on the one-click-checkout company Bolt, which is currently being sued by its biggest customer for having failed to deliver on the technological capabilities that it held itself out as possess.

Bolt's revenue projections were deemed overly bullish by The New York Times after Tiger Global executives met with the company.

Tiger Global passed on the Bolt deal because it was founded by a former investor who left the outfit in 2017: General Atlantic, WestCap and Untitled Investments.