The recent roar of an investment firm that has put Indian startups on the world map in the past decade and a half is transforming local startups into unicorns in the world’s second largest internet market at an unprecedented pace.
Tiger Global has written – or is late in the writing – more than 25 checks this year alone – ranging from a few million dollars to over $ 100 million. About 10 of its investments have been announced so far, with the rest still in preparation for the coming weeks and months.
The New York-based company, which recently closed a $ 6.7 billion fund, made investments in the ShareChat social network, Gupshup business messaging platform, and investment app Groww last week participated in the fintech app CRED round to help all of these startups achieve the best wanted unicorn status.
(A report in India speculated that Tiger Global is planning to invest $ 3 billion of its new fund in Indian startups. . estimates the $ 3 billion is well below the mark.)
Tiger Global also invested in Infra.Market and Innovaccer, two other Indian startups that went unicorn earlier this year. (India has already delivered 10 unicorns this year, up from seven last year and six in 2019.)
Tiger Global is currently at an advanced stage to support epharmacy company PharmEasy, which also became a unicorn last week, fintech company ClearTax (potentially worth $ 1 billion), the crypto exchange CoinSwitch, insurer Plum, and B2B marketplace Moglix (valued at over $ 1 billion). , social enterprises Kutumb and Koo (valued at over $ 100 million per CapTable), health tech company Pristyn Care and Reshamandi, said those familiar with the matter.
No other investment firm has written checks of this magnitude to Indian firms this year, and the frenzy has reached a point where dozens of startup founders are scrambling to get an intro with Tiger Global partners.
The 1-year strategy of every Indian startup in 8 words:
“Whatever I need to be funded by Tiger”
– Arnav (@arnav_kumar) April 10, 2021
Tiger Global’s confidence in Indian young companies is not new. Investing in Flipkart in 2009 and Ola in 2012 demonstrated the opportunities and level of risk appetite the US company wanted to operate in India at a time when both companies were struggling to raise money from some Indian investors .
Under its former partner Lee Fixel, the investment firm supported several young companies, including the online grocer Grofers, the logistics startup Delivery, the fashion e-commerce Myntra, the news aggregator InShorts, the electric scooter manufacturer Ather Energy, the music streaming service Saavn , Fintech Razorpay and the web producer TVF.
A handful of startup founders have anonymously recalled their investments from Tiger Global, all of which were completed within two to three weeks of the investment firm’s first call.
When Fixel left in 2019, the company slowed its investment pace and for almost a year it was mainly focused on helping SaaS startups.
Things have changed in the past few quarters and Tiger Global has become more aggressive than ever, said a venture capitalist who has invested in a few startups alongside Tiger Global on condition of anonymity in order to be able to speak openly.
The company is now also examining investment opportunities in startups that have lasted for months. Reshamandi, for example, is still in the brainstorming phase.
The aforementioned investor referred to Infra.Market as another example of Tiger Global’s new strategy. The first check was made out to Infra.Market in 2019 when the B2B startup was only two years old.
“Tiger then wanted to see if the startup could grow and convince other investors to support them. In December, Infra.Market raised around $ 250 million worth of money. Two months later, Tiger Global closed the new round valued at $ 1 billion, ”said the investor.
While it’s great for startups, it poses a challenge for some investors, said another investor.
If Tiger Global values a startup at a level that much of the industry cannot compete with and that tends not to lead the subsequent round, there are very few companies that can invest in the subsequent funding round, the investor said.
In private forums and in the past few weeks, Clubhouse, a number of investors have suggested that the recent optimism of some investors could prove difficult. “Tiger Global is traditionally very optimistic in India every two to three years. The problem is that if it is not optimistic we should pick the tab, ”said one investor.
“Under Scott Shleifer [MD at Tiger Global and pictured above], things can be different, ”added the investor. If you look at Tiger Global’s recent operations in other parts of the world, it sure looks consistent – and India will be an important global playground for the company – and several others – over the next few years.
India, the world’s third largest startup hub, is expected to produce 100 unicorns in the coming years, Credit Suisse analysts wrote in a client report last month. “India’s corporate landscape has been radically transformed due to a remarkable confluence of changes in the country’s funding, regulatory and business environment over the past two decades. An unprecedented pace of new business creation and innovation in a variety of sectors has resulted in an increase in the number of highly valued, unlisted companies, ”they write.
“The growth of highly valued companies has been made possible by a number of factors: (1) The natural lack of venture capital in an economy with low per capita wealth has been addressed by an increase in (mostly foreign) private equity for each year over the past decade has exceeded the public market transactions; (2) Increasing teledensity and the spread of smartphones and the Internet. By 2005, fewer than 15% of Indians had a phone, up from 85% now; More than 700 million people now have internet access (now 40% penetration) due to cheaper data and falling smartphone prices. “
“(3) Deep-seated physical infrastructure changes: Almost all residential areas are now connected by all-weather roads, compared to only half in 2000, and all households are now electrified, down from just 54% in 2001; (4) Financial innovations are accelerating thanks to the world’s leading “India Stack”, which offers innovative applications such as UPI, which are based on universal access to bank accounts, mobile phones and biometric ID (Aadhaar) and are supported by higher data availability ;; and (5) multi-sector development of ecosystems that now offer a competitive advantage over global competitors; For example in technology (4.5 million IT professionals) and pharma / biotechnology (several Indian companies can now afford $ 200-300 million in research and development annually). “