Tiger Global hedge fund 1 gained an enduring mark in the Silicon Valley for its startup financing strategies, at a time when the Soft Bank 2 and venture capitalists 3 were eyeing an upper hand in the segment. Between January and May 2020, the New York based Tiger Global backed 118 ventures extending its portfolio to 400 firms in the Silicon Valley.
Hyperactive: Tiger Global acts quickly to reach out to the entrepreneurs and gets the early bird advantage.
Accelerated Deal Making: Once the firms are identified, the deal making is accelerated with matchless speed. Investors are persuaded without giving a chance for a second thought.
Simpler procedures: Investment contracts are finalised in days, skipping lengthy due diligence.
Experience: They have a backing of 20 years’ experience in investments.
Online advantage: The online conferencing platforms, thanks to COVID-19 pandemic, enable more number of client engagements and more deal closures.
Systematic Evaluation of Clients: Tiger Global applies a variety of tracking and evaluation metrics unlike the conventional method of seeking the board seat to control the client.
Encouraging Balance of Power: They encourage balance of power between investors and entrepreneurs rather than seeking an upper hand for the investor. This earns the good will of the clients.
When SoftBank does business based on gut feeling, Tiger Global is backed by a disciplined strategy centred on collecting a basket of firms in promising markets. This makes their presence more profound.
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What challenges would hedge funds such as Tiger Global face, when investing in startups?
1. Hedge Fund: A pool of money contributed by investors to invest in different assets to get maximum returns and least risk
2. SoftBank: Japanese multinational investment conglomerate.
3. Venture Capitalist: Private equity investor that provides capital in exchange of equity stake.