Tiger Global's Aggressive India Investment Strategy
Investment Surge Fuels Unicorn Creation in India
A significant influx of investment, originating from a prominent firm historically credited with elevating Indian startups onto the global stage, is currently accelerating the creation of unicorn companies within India at an unprecedented rate. This surge is occurring in the world’s second-largest internet market.
Tiger Global’s Prolific Investment Activity
Tiger Global has either finalized or is nearing completion of over 25 investment deals with Indian startups this year. Approximately 10 of these investments have already been publicly announced, while the remaining transactions, valued between $10 million and exceeding $100 million, are scheduled to be revealed in the coming weeks and months.
The New York-based firm, having recently secured a $6.7 billion fund, spearheaded investments in social networking platform ShareChat, business messaging service Gupshup, and investment application Groww last week. Furthermore, the firm participated in a funding round for the fintech app CRED, enabling each of these startups to achieve the coveted unicorn status.
Reports initially suggested Tiger Global intended to allocate $3 billion from its new fund to Indian startups; however, sources close to TechCrunch indicate this figure is a substantial overestimate.
Expanding Portfolio of Unicorn Startups
Tiger Global has also invested in Infra.Market and Innovaccer, two additional Indian startups that attained unicorn status earlier in the year. India has already seen the emergence of 10 unicorns this year, compared to 11 in the previous year and 6 in 2019. Tiger Global holds investments in over 20 of the 47 Indian unicorns currently in existence.
Currently, the firm is in advanced discussions to support epharmacy company PharmEasy, which recently became a unicorn, fintech firm ClearTax (potentially at a $1 billion valuation), cryptocurrency exchange CoinSwitch, insurance provider Plum, B2B marketplace Moglix (valued at over $1 billion), social platforms Kutumb and Koo (valued at over $100 million, according to CapTable), healthtech company Pristyn Care, and B2B e-commerce platform Bzaar, as well as agritech firm Reshamandi. It’s important to note that some of these deals are still pending finalization and terms may be subject to change.
No other investment firm has deployed capital of this magnitude into Indian companies this year – or historically – and the resulting competition has intensified, with numerous startup founders actively seeking introductions to Tiger Global partners.
A History of Risk-Taking and Confidence
Tiger Global’s confidence in promising Indian companies is not a recent development. Its early investments in Flipkart in 2009 and Ola in 2012 demonstrated a willingness to accept substantial risk in the Indian market, particularly when both companies faced challenges securing funding from established Indian investors.
Under the leadership of former partner Lee Fixel, the firm supported a range of emerging businesses, including online grocer Grofers, logistics startup Delivery, fashion e-commerce platform Myntra, news aggregator InShorts, electric scooter manufacturer Ather Energy, music streaming service Saavn, fintech company Razorpay, and web production studio TVF.
Several startup founders, speaking anonymously, recounted that investments from Tiger Global were typically concluded within two to three weeks of the initial contact with the firm.
Shifting Strategies and Renewed Aggression
However, a leadership transition – the departure of Fixel in 2019 – temporarily slowed Tiger Global’s activity in India, as the firm shifted its focus primarily towards SaaS startups.
Recent quarters have witnessed a significant change, with Tiger Global adopting a more aggressive approach than ever before, according to a venture capitalist who has collaborated with Tiger Global on several investments, requesting anonymity to speak openly.
The firm continues to make substantial investments in late-stage companies, but is also actively exploring opportunities in startups that are only a few months old. Infra.Market serves as an example of this new strategy; Tiger Global initially invested in the B2B startup in 2019, when it was just two years old.
“Tiger Global initially sought to assess the startup’s growth potential and attract additional investors. In December, Infra.Market secured funding at a $200 million valuation. Just two months later, Tiger Global finalized a new round at a $1 billion valuation,” the investor explained.
Challenges for Other Investors
While beneficial for startups, this activity presents challenges for some investors. Two investors noted that when Tiger Global establishes a valuation that exceeds the capacity of much of the industry, it can become difficult for other firms to participate in subsequent funding rounds.
Concerns have been voiced on private forums and, recently, on Clubhouse, regarding the potential for the current optimism to be unsustainable. “Tiger Global has historically exhibited periods of strong optimism in India every two to three years. The concern is that when their outlook shifts, others may bear the consequences,” one investor stated.
“With Scott Shleifer [Partner at Tiger Global] at the helm, the situation may evolve,” another investor added. Tiger Global’s recent activities in other global markets suggest a broader trend towards increased aggression.
Increased Competition in the Indian Market
Tiger Global’s growing interest in India coincides with increased activity from other firms, including Steadview, Prosus Ventures, Falcon Edge Capital, and even Google, all of whom are expanding their strategies for the world’s second most populous nation. One investor commented during a recent Clubhouse session that the surge in investments also reflects the abundance of capital available in the market.
India, now the world’s third-largest startup hub, is projected to generate 100 unicorns in the coming years, according to analysts at Credit Suisse. “India’s corporate landscape is undergoing a fundamental transformation driven by a remarkable convergence of changes in funding, regulation, and the business environment over the past two decades. An unprecedented rate of new company formation and innovation across various sectors has led to a surge in the number of highly valued, unlisted companies,” they wrote.
“This growth in highly valued companies has been facilitated by several factors: (1) the historical scarcity of risk capital in an economy with low per capita wealth has been addressed by a significant increase in (primarily foreign) private equity, exceeding public market transactions in each of the last ten years; (2) increased teledensity and penetration of smartphones and the internet. Less than 15% of Indians had a phone in 2005, compared to 85% today; over 700 million people now have internet access due to affordable data and declining smartphone prices (40% penetration); (3) substantial improvements in physical infrastructure: nearly all habitations are now connected by all-weather roads compared to only half in 2000, and all households are now electrified versus just 54% in 2001; (4) accelerating financial innovation, driven by the world-leading “India stack,” which features innovative applications like UPI built on universal bank account access, mobile technology, and biometric identification (Aadhaar), supported by greater data availability; and (5) the development of ecosystems in several sectors that provide a competitive advantage over global peers, such as in technology (4.5 million IT professionals) and pharmaceuticals/biotechnology (several Indian firms can now afford $200-300 million of annual R&D).”
This story has been updated with additional details.
