The investments by Tiger Global and SoftBank led to a flurry of deals in 2015 era in the early-stage ecosystem with multiple foreign investors started pouring capital.
New York-based global hedge fund Tiger Global seems to be making a comeback to the investing table after a virtual freeze of close to three years, and it has its eyes set on its once favourite bets — the early stage startups in India.
Since October last year, Tiger Global has led multiple early-stage investments with $2 million round in tea startup Chaayos, $6 million in over-the-top video platform The Viral Fever, $3 million in CheckMate – a startup that helps restaurants in managing multiple food ordering apps, and $6.4 million in facilities management software startup Facilio.
“Tiger Global is now seeing more opportunity in the Indian market and so they are coming back to look at next set of startups to scale up from here. They had backed multiple startups out of which some didn’t work while in some they made a killing, so that’s the kind of game they had,” Harish HV, former Partner, India Leadership team, Grant Thornton India told FE Online.
An email sent to Tiger Global didn’t elicit any response.
Tiger Global’s return to early-stage funding, however, seems contrary to what it is expected to do — ie, backing mid-stage startups, after multiple of its earlier bets such as Zopper, Zo Rooms, Little, Cube26, etc., either got shut or acquired.
“There are five-six venture capital investors who have raised their new rounds to focus on mid-stage startups as early-stage is now fraught with risks. So the general sense across VCs is that Tiger Global also is going to invest in mid-stage. However, it may go completely different,” said Suresh Jayaraju, Senior Director, Head,10000 Startups, Nasscom.
Tiger Global raised $3.75bn in October this year for its latest fund called Private Investment Partners XI, The focus with the new fund would be on consumer internet, cloud, and industry-specific software markets along with consumer brands companies in China, India and the US.
“We believe the internet is the defining economic theme of this generation,” Financial Times quoted the fund saying in its investor materials. “Without a substantial percentage of one’s assets allocated to this theme, we believe it will be difficult to outperform.”
For instance, both CheckMate and Facilio operates into cloud-based offerings. “Legacy systems, high upfront costs, and long implementation cycles of traditional facilities management software vendors are bogging down clients with their inflexibility. There is a definitive shift towards embracing an IoT and AI led software system that empowers the built environment with speed and agility to improve efficiencies,” said Prabhu Ramachandran, Founder & CEO, Facilio.
“Replication of successful global models such as e-commerce, on-demand services, food delivery, cab booking was the plan around 2015 in India but now there is a shift to newer opportunities. These are backed by IoT, deep tech and related areas which will become a $1 trillion opportunity over next 8-10 years for an economy like ours,” said Jayaraju.
So Tiger Global and many other investors would be focusing on new and focused deep tech-backed opportunities applicable across areas particularly agri-tech, fintech, B2B saas which are most promising, he added.
Tiger Global had invested an unbridled amount of capital in Indian startups since early 2014, backing up around 50 companies, The amount invested as various reports has been around $2 billion. The investments by Tiger Global and SoftBank led to a flurry of deals in early-stage ecosystem with multiple investors across investment stages from outside India started pouring capital including DST Global, Kinnevik, Warburg Pincus, Steadview Capital, Foxconn, etc. This might be the scenario once again.
“The general assumption is that there is a snowballing effect. If big funds enter a market it is natural for other investors to follow to avoid missing out on opportunities. Hence, there will lot of foreign funds coming in,” said Jayaraju.
Tiger Global had invested in $1 billion in Flipkart Group. Part exiting Flipkart in the historic buyout of India’s e-commerce poster boy by US retail behemoth Walmart for $16 billion earlier this year, returned $3.3 billion to Tiger Global. It still holds 5% in Flipkart.