Even after aggressively trimming its tech portfolio in recent months, Tiger Global hasn’t been able to staunch the losses. The hedge fund has seen its assets shed more than half their value since the start of the year, according to Bloomberg.
In response to the sharp 52% decline, Tiger Global cut management fees and revised its client lock-up policy. It also dropped its management fee from 1.5% to 1% through December 2023. And even though some investors agreed to lock-up deals that would limit withdrawals to 25% from the hedge fund and 20% for the long-only product, Tiger Global bumped the allowable cash-out rate to 33%.
Those closely tracking the VC firm may have seen this coming. Just two weeks ago the firm’s 13F filings revealed that the company cut its entire stake in startups like Bumble, PayPal and Affirm this year. It also cut significant stakes in Spotify, Zoom and Robinhood. At the time, it was already known that the hedge fund’s value had dropped 34% in the first quarter alone. But apparently, Tiger Global’s cuts weren’t enough for some LPs.
The moves are part of a broader push by Tiger Global to appease investors contending with the tech downturn. In a letter obtained by Bloomberg, the firm managers told investors “our recent performance does not live up to the standards we have set for ourselves over the last 21 years and that you rightfully expect.” Even so, the firm has reportedly seen five times more inflows than redemption requests, a sign that investors are still bullish on the long-term prospects of Tiger.
Those investors, however, are on one side of a controversial trade. Tiger Global is known for taking risky big bets on late-stage startups, something that other, more conservative VCs consider risky. The firm began shifting toward investing in earlier-stage startups this year, but the shift may have come too late.
The question now is whether Tiger Global’s fall from financial grace will prompt a reconsideration of the firm’s historically bullish approach, or prove to be just a blip.