How Tiger Global, one of the biggest backers of startups over the past decade, fell to earth

It was Robertson who had mentored Chase Coleman III as an analyst, then wrote Coleman the $25 million seed check he used to start Tiger Global when he was 25 years old. It was Robertson who introduced Coleman to some of the firm’s first limited partners, then provided him office space for Tiger Global’s first 13 years of operation. And it was Robertson’s investment approach of “catching the next big wave, not riding the ripples” or maintaining a “contrarian bias,” according to the letter sent Oct. 3, 2022, that would inspire and shape Tiger Global’s very own investment philosophy for 22 years. 

“Through his example, we learned how to persevere through adversity and come out stronger on the other side,” reads the letter, seen by Fortune.

But little did the firm know how much adversity would be in store in the next 11 months—or if it would really manage to come out stronger this time. 

A few months after Coleman, his right-hand investor, Scott Shleifer, and the rest of the Tiger team sent that October 2022 letter to its investors—known in industry speak as limited partners, or LPs—Coleman’s hedge fund filed a document with the Securities and Exchange Commission reporting it had shrunk from $86 billion to $51 billion in net assets under management from the beginning of the year. Tiger’s hedge fund, in particular, lost nearly 60% in 2022—making it one of the worst performing hedge funds of the year on Wall Street. [The firm encompasses a hedge fund, private investment fund, and a crossover fund which includes both private and public investments.] 

Troubled performance aside, some internal bickering began to surface to limited partners—and the broader public. In January, a settlement between a former employee and the firm reportedly began circulating among Tiger investors. And this summer, an anonymously written and damning memo that made aggressive, yet unsubstantiated, claims about the firm’s performance, investment approach, and personnel started circling far and wide within Wall Street and Silicon Valley circles. It’s the sort of squabbling and attention that makes LPs look twice at an investment.

“Where there is smoke, there is often fire,” says a former portfolio manager at pension fund Calpers, who says the memo as well as Tiger’s investment activity raises concerns about the firm’s approach and process.(Calpers, last year, invested $300 million in Tiger Global’s 14th private market fund, according to the pension fund’s disclosures. This person had already left the firm and was not involved in the decision. A Calpers spokesperson declined to comment.)

Tiger Global is clearly wary of the potential threat to its business. After the anonymous document was spread around the week of Aug. 21, the firm responded—sending a letter to its investors by Friday afternoon, alleging that it had been written by a “disgruntled former employee” and decrying the memo as “packed with lies,” according to the letter, which was obtained by Fortune. Signed by the Tiger Global team, the letter stated that the firm had “been engaged with experts to assist us in responding to these malicious attacks.” (A Tiger Global spokeswoman declined to comment on the record for this story.)

One thing seems to be clear: Someone has it out for the firm. And the timing couldn’t be worse.

The Tiger cub

Before Coleman ever went off on his own in 2001, he had a front-row seat to one of the most spectacular hedge fund closures in history. Coleman, who had grown up with Robertson’s son, had joined the long-short investor’s hedge fund—called Tiger Management in reference to Robertson referring to people as “tiger” when he couldn’t remember their name—as an analyst fresh off his graduation from Williams College in 1997.

Robertson, who had accumulated a heaping $22 billion in assets at Tiger Management’s peak, was known for going against the grain. And during the peak of the dotcom boom, he famously shorted a series of high-flying tech stocks he believed were overvalued. Robertson’s premise was right. But it wouldn’t matter, because he wasn’t able to monetize it: After two years of clobbering losses, investors lost faith in him and withdrew funds en masse. Robertson closed the fund in 2000, blaming the irrational markets (critics blamed it on the fund getting “big and self-satisfied” and accumulating holdings so large they were difficult to sell). And he turned his attention to mentoring numerous promising investors who had worked for him, the crew that would be called the “Tiger Cubs.” That group included Philippe Laffont, who started the hedge fund Coatue Management; Bill Hwang, who launched the now-shuttered Archegos Capital Management; and, of course, Coleman and Tiger Global.

Peter Foley—Bloomberg/Getty Images

Coleman started off under a premise similar to Robertson’s—hunting for overvalued tech stocks to short, and especially international high-growth stocks that the fund could scoop up long. Coleman’s early investment team after the first few years included himself, Feroz Dewan leading the public investments, and Shleifer and Lee Fixel, leading the privates. 

Tiger’s debut into the private markets happened early in the firm’s life span, but it wasn’t splashy. Around 2003, the small investment team stumbled upon some interesting private companies while looking into public stocks, according to someone familiar with the matter. The firm would put together its first formal private fund that year—one with $76 million in assets. That first emerging-market-focused fund would be enormously successful—with a 58% net return, according to an investor letter seen by Fortune. By the end of 2006, Tiger Global was growing steadily: It raised $1 billion for a fourth private fund, and it was backing Chinese fliers like software company Longtop Financial Technologies as well as the Latin American travel agency Despegar and Russian email service mail.ru. Later it would become more active in U.S. tech stocks, accumulating an approximately 2% stake in Facebook and a 3% stake of LinkedIn. Tiger’s fifth fund, which closed in 2008, notched a 44% net return, according to a document reviewed by Fortune. 

As the firm grew, Tiger prioritized speed and began writing checks at a more rapid clip. One former Tiger employee recalls a partner taking a 10-hour red-eye to visit the offices of a prospective portfolio startup, crunching numbers, then meeting with the founders in the morning. Within 24 hours, that partner was already on a flight back home. 

“People say they just throw term sheets—that they don’t do due diligence,” the former employee says, but notes that this wasn’t their experience. “Everyone has high standards and does good work. People are super on top of things,” they said. 

Tiger’s investment team, which has historically included a coterie of Wharton School graduates, Goldman Sachs analysts, and alums of Silver Lake Partners, does much of its own road-mapping, modeling, and inquiry, and Tiger uses Bain & Co. to conduct external due diligence services. 

As for Tiger’s leader, Coleman can be stoic and hard to read on first impression, according to some. He “didn’t smile that much, didn’t give positive or negative feedback, you know, just takes the info in and makes a decision. Almost no emotion,” one person who has spent time with Coleman told Fortune on the condition of anonymity, adding that once they had established a relationship with Coleman, he became friendlier. 

Backing a startup a day—including weekends

By 2021—two years after private equity specialist Fixel had left the fund to start his own firm—Tiger had taken its need for speed up a notch. The pace at which the firm funded startups saw a massive increase, and Tiger garnered a reputation—met with much criticism from other venture competitors—for writing checks within mere days at lofty valuations. Prior to the end of 2020, the most deals Tiger invested in on the private side in a single quarter was 30 (in the second quarter of 2019). Just three years later, the firm’s highest quarterly deal count soared to a whopping 133 in the first quarter of 2022, per PitchBook private-markets data provided to Fortune. In 2021, Tiger backed the equivalent of nearly one startup every day—including weekends. 

“They kind of flipped a switch,” Kyle Stanford, a senior venture capital analyst at PitchBook, said of Tiger’s strategy in 2021. “They worked fast. They just kind of overcapitalized every company,” he says. 

During that same period, a record number of companies were going public after garnering billion-dollar valuations in the private markets, and Tiger was reaping the benefits. Between January 2021 and October 2022, 41 of Tiger’s portfolio companies went public, and Tiger distributed $8.3 billion to investors, it said in an investor letter—approaching one-third of the $30 billion in total capital Tiger had returned to investors during its first 21 years.  

Some of Tiger’s flurry of deals had to do with an investor the firm brought on in 2017—John Curtius, who eventually led the firm’s private software investing efforts and backed companies including Databricks, Snyk, Toast, Snowflake, SentinelOne, GitLab, Cohere, OpenAI, and Kustomer, among others. While new deals require signoff from Coleman or Schleiffer at Tiger, Curtius was involved in a slew of startup funding rounds during his five years at the firm, with PitchBook reporting him leading 111 of Tiger’s deals, compared with 54 for Shleifer or 32 for Griffin Schroeder. Forbes put Curtius’s investments at 250. Curtius left in late 2022 and is currently raising his own fund. Other notable departures since mid-2022 include investors Connie Lee and Sam Harland. 

While firms like Insight Partners and General Atlantic were raising behemoth funds during the same period, some industry insiders argue Tiger, as well as SoftBank, were changing the game of venture investing during those go-go days of 2021—by setting a precedent for due diligence that was far faster than normal, and for pushing up valuations. 

It’s no surprise, then, that as the firm has been clouded in controversy and reports of poor performance this year, some VCs are privately relishing their struggles.

“SoftBank and Tiger were the two biggest examples of this, you know, do-a-deal-at-all-costs-because-of-momentum behavior,” one venture capital investor, who requested anonymity to speak freely as they have mutual limited partners with Tiger, told Fortune. “Because of that behavior, they caused a lot of other funds to feel like they had to play Tiger’s game to compete—which is burning them, too. It’s the comeuppance that’s occurred.” 

‘To see them fall this fast is not surprising’

While Tiger was still plowing capital into startups, things started to take a turn in early 2022. The Federal Reserve announced an aggressive plan to hike interest rates to combat soaring inflation, and the pivot in policy sent the venture capital and public markets into a protracted downward spiral. 

Public stocks react much quicker to macroeconomic shifts and negative news than private companies do, and the impact was almost immediate. The Nasdaq Composite, a benchmark for tech stocks, cratered nearly 34% in 2022, with even blue-chip companies like Apple and Microsoft getting burned. Meanwhile, China’s tech economy, where Tiger has historically been a long-time investor, was reeling from a regulatory crackdown, and U.S. regulators have started taking a closer look at investment firms with Chinese holdings. The Wall Street Journal reported at the end of last year that Tiger Global has put a pause on investing in Chinese equities.

“Everything that they thought was going to happen, just kind of went away instantly, almost, in January” of this year, PitchBook analyst Stanford said. “To see them fall this fast is not surprising, they’ve obviously had trouble raising their next fund; they downsized it a couple times. And so 2021 just became this blip—that they saw something in the market and they were trying to capitalize [on] it. And they just kind of overextended themselves into VC.” 

Things have gotten better for hedge funds since 2022, as conditions became more favorable for tech companies in 2023—including a Federal Reserve that is beginning to temper rate hikes, and climbing valuations for companies that are building or investing in artificial-intelligence models. The Nasdaq index has soared 35% year to date. Tiger’s hedge fund, meanwhile, is still lagging, up about 18% through July.  

Although there are hints the IPO market may soon open up, the private markets are still stalled. Valuations for companies in the latest stages were down 33% in the second quarter, compared to the first. In October, Tiger told LPs that the firm had decreased valuations every month of 2022. 

Tiger’s $12.7 billion private fund, launched in late 2021, reported 20% paper losses as of the end of last year. Tiger’s public hedge fund has seen even more dramatic losses: The strategy was down nearly 56% in 2022, and, though it is seeing a rebound so far in 2023, it is still clawing its way back to breakeven. 

After Tiger’s 2021 shopping spree, the firm’s assets are now weighted on the private side of the business, according to a person familiar with the matter. (The firm declines to specify by how much.) 

The firm’s private returns will no doubt be helped if the firm sells its stake in buzzy artificial intelligence startup Cohere, billed as an OpenAI competitor (which Tiger is also invested in), at a reported $3 billion valuation—up from its last public round at roughly $2 billion. The firm also recently sold its remaining stake in Indian e-commerce startup Flipkart to Walmart for $1.4 billion, and per the Wall Street Journal, the deal valued the company at $35 billion, down from $38 billion in 2021. 

Some of Tiger’s attempts to sell stakes, however, don’t seem to be going as well. According to one investor with knowledge of the stakes up for sale, the valuations in some cases would be at 40% to 70% discounts, and they believe Tiger is unlikely to make progress on many of them, they told Fortune on the condition of anonymity. 

As of Oct. 2022, Tiger had distributed $30 billion to limited partners, generating 34% gross IRR (a 24% return after Tiger’s fees), in part driven by a dozen of its investments that had each produced more than $1 billion in gains, according to a separate investor letter that was obtained by Fortune. 

‘Meme warfare’

But as Tiger was attempting to stem the bleeding from its investment strategy, a new wound was opening. 

Earlier this year, a document began circulating among investors and founders, detailing aggressive, and unsubstantiated, allegations against Tiger. But it wasn’t until late August that the document—dubbed by many a “memo”—made another damaging trip around texts, emails, and phone calls. In the course of about a day, it was spreading like wildfire through the inboxes of many VCs, founders, and fund managers.

The memo, falsely billed as a draft of an exposé by The New Yorker, contains a number of serious allegations against the firm that Fortune is choosing not to describe in detail as they are as yet largely unsubstantiated. 

However, the document makes mention of a reported $10 million settlement with a female employee, as Semafor first reported in early 2023, as well as details of struggles Tiger has encountered while raising its new venture capital fund, that have also been previously reported. 

Some insiders say this type of thing—an anonymous document making detrimental claims against a firm—could fuel a wider fear. “This is a new form of meme warfare that every fund should be petrified of,” one fund manager, who spoke on the condition of anonymity, recently told Fortune. “You can essentially create long-form, unsubstantiated claims that can go viral to every major decision-maker, and to refute them is to only give them more credibility. That’s scary.” 

There are always rumblings in the hedge fund world about what’s going on at other firms; some limited partners—such as pension funds or mission-oriented foundations—are sensitive to any kind of potentially damaging rumors making their way into the public eye. Tiger investors include the Saudi Arabian sovereign wealth fund, Sanabil Investments, but also a series of pension funds or charitable foundations including Calpers, the Rockefeller Foundation, and the Kraft Family Foundation.

Some investors have been asking Tiger questions about the memo’s contents, according to a person familiar with the matter.

“There’s definitely a section of LP land that is sensitive to headline risk,” says a manager at an early-stage-focused limited partner that has not backed Tiger Global. 

The challenge for Tiger will be to convince those LPs that the blip of the past couple of years will turn out to be a smudge on their track record, instead of a gaping hole.

And to be sure, Tiger is certainly not the only hedge fund contending with investor issues. According to a Bloomberg report this week, other so-called Tiger cubs, whose managers came from Tiger, have seen their inflows from U.S. investors slow. For example, Lone Pine Capital, a fellow cub, saw inflows plunge from $364 million to $24 million for the 12 months ending in March, per the report. 

Industry watchers like PitchBook's Stanford don’t imagine Tiger will revert to its more temperate pre-2020 investing playbook. Tiger is still in the process of raising a new fund to invest in private companies, with the original target to raise $6 billion (the fund had only raised about $2 billion of that, as of mid-June). “That [size] does not say, ‘We’re going to revert back to how we invested before 2021,’” Stanford argues. And “whenever there is growth in valuation, or a rebound in the venture market, Tiger Global is going to be right there,” Stanford believes. 

Tiger’s private portfolio does still boast some potential big-time winners, with bets on promising startups like Cohere, OpenAI, and Instacart, which is set to go public in September. But until the IPO floodgates reopen, Tiger is stuck. 

“The jury’s out,” Stanford concedes. “But right now, it’s not looking good.”

In the end, it was going against the grain—betting against the dotcom boom—that led to Tiger Management’s demise. In 2021’s venture boom, Tiger Global did exactly the opposite: Not only did it ride the wave of high valuations and large checks—it helped create it, making more investments in private companies than any other firm and delving into some of the private market’s most popular names.

Going against the grain cost Tiger Management billions. Going with it will either reward Tiger Global—or destroy it.