Hedge Fund Tiger Global’s $17 Billion Loss May Be Biggest Ever

Things seem to be going from bad to worse at hedge fund giant Tiger Global. Its losses for 2022 are up to $17 billion, according to a new Financial Times report:

Tiger Global has been hit by losses of about $17bn during this year’s technology stock sell-off, marking one of the biggest dollar declines for a hedge fund in history.

The run of poor performance means the firm — one of the world’s biggest hedge funds and a big investor in high-growth, speculative companies whose shares have tumbled since their pandemic peaks — has in four months erased about two-thirds of its gains since its launch in 2001, according to calculations by LCH Investments.

Less than a week ago, the Financial Times estimated the losses at closer to $15 billion. But the NASDAQ Composite index of tech stocks has fallen another 9.5% since then.

Tiger’s losses may be the largest in the history of hedge funds. Bridgewater Associates lost $12 billion in 2020, and Melvin Capital took a $7 billion hit last year as meme stocks soared.

But Tiger’s losses dwarf those, and also far surpass some of the most famous hedge fund flameouts ever.

Long Term Capital Management made international headlines and required a bailout when its Nobel Laureate traders lost just $4 billion.

I suspect Tiger’s losses may be even worse than they look. As the Financial Times notes, the $17 billion figure doesn’t include Tiger’s investments in private tech startups.

Tiger was one of the biggest investors in large, late-stage private tech companies. It helped to drive those valuations up 653% since 2018.

Now, the problems in the public markets are beginning to affect private markets as well. Late stage valuations have begun to drop.

Given that the Nasdaq is down over 25% since November, they may have a very long way to fall.

During the bull market, Tiger was well known for doing little or no due diligence and paying extremely high prices. Indeed, its tactics forced other venture firms to shorten their diligence process and pay more.

Now, markets are sinking and easy funding is drying up. Tiger may be stung by its lack of diligence and willingness to bid aggressively as some major startups fail.

Where do the difficult market conditions leave Tiger Global?

So far, there have been no reports of massive margin calls or investor redemptions. But I expect to see a run on the fund’s remaining capital at any moment.

What do you think will happen to Tiger Global and other major hedge funds? Leave a comment at the bottom and let me know.

More on markets:

Hedge Fund Giant Tiger Global Losing $28 Million an Hour

Hedge Fund Tiger Global’s Coming Liquidity Crisis

Melvin Capital Faces Investor Revolt

Photo: Tiger Global CEO Chase Coleman

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What the Best Founders I Know Have in Common

Hi everyone, hope you had an awesome weekend! Today, I want to talk to you about some of the smartest people I know.

As an angel investor, I meet with a lot of startup founders. As I took a walk on the Hudson today, it occurred to me that the most successful ones all remind me of each other.

So what distinguishes the best founders from the rest? Here are a few thoughts:

1) They have all the facts at their fingertips. Whenever I ask them a question, they tend to know the answer cold.

I could be asking about a product feature, customer acquisition strategy, or a metric like gross margin. Whatever it is, they’ve thought about it already and know all the relevant facts.

2) Strong customer focus. The most successful founders I’ve seen are obsessed with their customers.

They know everything about them and what they need. And they tailor their product ever more carefully to those needs as time goes on.

What are the less successful founders focused on? Often their competitors, someone “stealing their idea,” or endless fundraising.


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We should always remember that the business’s goal is to serve the customer. Don’t let distractions take you away from that.

3) Openness to questions and criticism.

The best founders I’ve seen gladly answer any question an investor asks. They’re eager to show off their awesome product and happy customers!

The less successful ones evade questions and try to convince investors the business is going better than it really is. I sometimes suspect they’ve convinced themselves too, at their peril.

If we’re forthcoming with information and open to constructive criticism, we can learn from others and improve!

One of the most exciting moments for me as an investor is when a new founder reminds me of one of the best I’ve met. That’s when I start to salivate and reach for my checkbook. 🙂

The good news is that the best founders have a lot to teach all of us about how to up our game, if only we’re willing to listen!

What do you think makes a great founder? What did I miss?

Leave a comment at the bottom and let me know!

More on tech:

The Startup Pitch Checklist

Amp It Up

How to Write a Deal Memo

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Hedge Fund Tiger Global’s Coming Liquidity Crisis

Hedge fund giant Tiger Global Management has lost nearly half its assets in 2022. But it’s not pulling back.

On the contrary, it made 16 investments in private tech startups in April, per Crunchbase. That was enough to tie for #1 most active investor in the United States.

This could be a huge mistake.

Many investors will probably try to pull their money from Tiger after the huge losses. What’s more, brokers could issue margin calls due to the massive losses.

The investments in private companies that Tiger is making are illiquid. It cannot get that money back to meet redemption requests and margin calls.

These investments are huge. Last year, Tiger’s median investment size in a startup was $114 million.

So Tiger may have plowed as much as $2 billion into opaque, illiquid company shares. In a month.

That is a very significant sum for a fund that, after its massive losses this year, is down to about $20 billion in assets under management. Tiger started 2022 with about $35 billion in assets.


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If Tiger finds itself unprepared for redemption requests from investors, expect them to gate their fund. This common hedge fund tactic limits withdrawals or prohibits them altogether until markets stabilize.

And that could be a very long time. Any investors who wish to redeem their Tiger investment should consider doing it sooner rather than later, before a gate provision is triggered.

The more dangerous scenario for Tiger is large margin calls from brokers. If Tiger is faced with dwindling liquid assets (its publicly traded stocks) and lots of illiquid assets (its private tech startup shares), Tiger could be forced into a fire sale.

In that scenario, Tiger would have to sell desperately to meet margin calls, taking whatever price is available. The whole market knows Tiger is long growth tech stocks, so it will short those stocks.

This could force Tiger into even more desperate selling until it goes bankrupt.

There’s no telling if Tiger will implode or manage to right itself. But I strongly urge the fund’s managers to avoid illiquid investments at this time.

What do you think will happen to Tiger? And which hedge funds do you think are next for big losses in this tough market?

Leave a comment at the bottom and let me know.

Have a wonderful weekend everyone! 👋

More on markets:

Hedge Fund Giant Tiger Global Losing $28 Million an Hour

How Giant Hedge Fund Tiger Global Blows Up

Melvin Capital Faces Investor Revolt

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Photo: Tiger Global CEO Chase Coleman

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Amp It Up

“Only the government can print money; the rest of us have to take it from somebody else.”

Frank Slootman

Frank Slootman has been the CEO of three companies: Data Domain, acquired for $2.4 billion, ServiceNow, market cap $94 billion, and now Snowflake, market cap $52 billion. His track record has few parallels.

But Slootman wasn’t always a big success. As a teenager in the Netherlands, he cleaned toilets for a living. When he moved to the United States, he had his heart set on joining IBM.

They rejected him. 12 times.

So how did Slootman go from obscure Dutchman to one of the biggest names in tech? By bringing a warrior’s mentality to business.


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Slootman focuses like a laser on destroying the competition, on breaking their will to fight. And the most powerful weapon in his arsenal is growth.

When you grow much faster than your competitors, it demoralizes them. And as you become the winner, you can begin poaching their best people, causing the rest to lose all confidence.

The importance of growth to Slootman’s approach is impossible to overstate. It’s also born out by data:

“‘Grow Fast or Die Slow’ is the title of a 2014 McKinsey & Co study that examined thousands of software and services companies between 1980 and 2012. It concluded that growth trumps everything else as a driver and predictor of long-term success. ‘Super grower’ companies, which McKinsey defined as 60% or more annual growth, had five times higher returns than medium growth companies (which had less than 20% annual growth). Super growers also had an eight times greater likelihood of reaching $1 billion in annual revenue. “

So how do you grow fast? Slootman recommends focusing on one key thing.

Many priorities means no priority.

You should also push everyone to move faster at all times:

“Leaders set the pace. People sometimes ask to get back to me in a week, and I ask, why not tomorrow or the next day? Start compressing cycle times.”

Frank Slootman

But not just any team can achieve this. Finding the very best talent will make or break your business:

“Hire more for aptitude than experience and give people the career opportunity of a lifetime.”

Frank Slootman

This talented group of people also must be motivated by an important mission. Snowflake is making data queries 10-100x faster, leading to a total revolution in how humans use data to make decisions.

That’s the kind of mission that will put pep in your step!

Slootman also has some interesting info for investors in startups, such as myself. The way he spotted “super grower” companies to take the helm of was by looking for a fast growth track record, a huge market, and extremely happy early customers.

We can use the same criteria to find great investments.

Slootman’s book is energizing, exciting, and a true page turner. That’s rare in the world of business books.

I strongly recommend getting this slim volume for yourself! After reading Slootman’s words, I felt ready to run through a wall.

You will too!

Let’s close with a great quote from Frank:

“Only in hindsight will you truly realize what your experiences have meant. That is why it’s okay to embrace your inevitable challenges and setbacks as part of your journey. They are there for a reason.”

Frank Slootman

What do you think Slootman got right, and did he leave out?

Leave a comment at the bottom and let me know what you think.

Have a great day everyone!

More on tech:

Hedge Fund Giant Tiger Global Losing $28 Million an Hour

The Startup Pitch Checklist

The Lean Startup

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Hedge Fund Giant Tiger Global Losing $28 Million an Hour

Massive hedge fund Tiger Global Management is down nearly 50% so far this year, according to a new report from the Financial Times:

Tiger Global’s flagship hedge fund was dealt a fresh blow in April and is down more than 40 per cent this year, in the latest sign of how star investors who rode the big rally in tech stocks have been wrongfooted by a sharp pullback.

Tiger Global’s hedge fund lost 15.2 per cent in April, according to a person familiar with the matter, taking it down 43.7 per cent in the first four months of 2022. This year’s losses and a 7 per cent reversal in 2021 mean that the Tiger Global hedge fund’s gain of 48 per cent in 2020 has been completely erased.

The group’s long-only fund lost 24.9 per cent in April and is down 51.7 per cent in 2022, the person said. Across the two funds, the firm managed about $35bn in public equities at the end of 2021.

The losses are some of the biggest in the history of hedge funds:

Back of the envelope calculations based on the reported $35bn size of Tiger’s overall public equities book at the end of last year indicate that it has probably suffered a nominal loss of at least $15bn in 2022.

Given that there were 82 trading days in January-April, this works out to be a loss of roughly $183mn every day that markets were open this year. Or $28.1mn every hour that US markets were open.

Tiger has been torched by plummeting tech stocks. Its short positions have failed to make up the difference.

I predicted a meltdown at Tiger Global on this blog on February 7th. It took less than 3 months.

Two things happen when a hedge fund drops by half: people assume it can go down all the way, and top employees start leaving.

After all, they could soon be out of a job anyway. Even if not, hedge funds can’t charge that juicy 20% performance fee until they make back all their losses.

This means no big bonuses for a long, long time.

Tiger’s problems are compounded by major stakes in many tech startups. The hedge fund roiled the venture capital world by putting huge sums at eyewatering prices into late-stage companies in the last few years.

As an angel investor, I’ve had many deals that Tiger is in cross my desk. I can confirm they tend to invest huge sums (often over $100 million) in startups at staggering valuations.

Tiger is also well known for doing little if any due diligence on these companies. It’s likely that Tiger’s fast-and-loose approach could have led it to invest in many weak or even fraudulent companies.

Tiger’s losses may be much worse than 50% when you account for its startup investments. Valuations of late stage companies like those Tiger invests in are down over 20% from last year.

It’s easy to hide those losses because unlike publicly traded stocks, the price of these privately held shares seldom changes. But sooner or later, the chickens will come home to roost.

Money locked up in startup investments could also cause a liquidity crisis for Tiger. If investors are spooked by losses and ask for their money back, Tiger can’t get back money it invested in startups.

This illiquidity also makes Tiger vulnerable to margin calls. After its huge losses, brokers may demand more collateral.

With big losses in public markets and the rest of its money locked up in private ones, Tiger may not have the cash.

So what’s next for Tiger?

Melvin Capital recently tried to remove it’s “high water mark” so it could start charging performance fees again. Investors balked, and now the fund may shut down.

Tiger, reeling from losses and with no fat performance fees in sight, could shut down too. Or perhaps it will be rescued by a sudden upturn in tech stocks.

But until then, Tiger CEO Chase Coleman must be dealing with some very angry investors.

What do you think will happen to Tiger and other hedge funds suffering from huge losses? Leave a comment at the bottom and let me know.

More on markets:

How Giant Hedge Fund Tiger Global Blows Up

Hedge Funds Pull Back from Tech Amid Big Losses

Hedge Funds Could Lose Nearly Half of Assets Under Proposed SEC Rule

Photo: Tiger Global CEO Chase Coleman

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How to Answer Investor Questions

There’s tons of advice out there on how to pitch investors. But what about what comes next?

After any pitch, investors are likely to ask numerous questions. How do you answer them in the most effective way?

Here are some tips:

Pacing

One of the biggest mistakes I see founders make is taking too long to answer a question. The answer should be about the same length as the question.

When you take too long answering one question, you run out of time to address others. You’re also more likely to start rambling and lose the investors’ attention.

Be Direct

Investors may have some tough questions for you.

Tough as they may be, you should answer these questions as directly and specifically as possible. If someone asks for your churn figures, give them numbers, not a story.

Whenever I sense a founder isn’t giving me the information I need to make a decision, I start mentally moving on to the next company.

Don’t Get Defensive

For early stage startups, no one is expecting you to have everything dialed in just right. If you had that, you wouldn’t be a startup.

You’d be a Fortune 500 company!


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So when investors ask the tough questions, don’t feel like we’re attacking you. We’re not.

We just need certain info to make a financial decision.

It’s Okay to Not Know

An investor might ask you for some very specific info in a meeting.

It’s perfectly okay to say you don’t have that information in front of you. What’s important is to promptly follow up and get the investor the information they asked for.

Always Be Honest

Many founders have wanted to put a company logo on a slide when that company isn’t really a customer…yet. Or maybe claim a big name investor is in the round when in reality you’re just talking with her.

Don’t give into these temptations. When you make presentations to investors as part of a fundraise, you’re opening yourself up to serious legal liability.

If you make a knowingly false statement, you could go to prison for securities fraud.

Most founders would never cross this line, but for those who might be tempted, I urge you to protect yourself and just give the truth.

Be Glad for the Grilling!

Answering a ton of questions can be really tough! But be glad for each one.

One of the surest signs I’m not interested in a startup is when I don’t ask any questions. I’ve already ruled the company out.

I often ask questions when I’m wondering if there’s any reason not to invest. And I’m not alone.

Wrap-Up

These investor questions are often the last step before a check.

Keep your answers brief, concise, and factual. When founders crisply answer questions with detailed information, I find it enormously impressive.

Best of luck!

What has it been like for you answering investor questions? What did I miss?

Leave a comment at the bottom and let me know.

Have a great day everyone!

More on tech:

The Startup Pitch Checklist

Growing Veggies on Mars

Startups’ Secret Marketing Weapon: Blogging

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Misfits Market

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Call for Awesome Unity Engineers

Hey everyone!

I wanted to put the word out: if you are a great Unity engineer, I have an incredible opportunity for you.

A metaverse startup just raised a big Series A and needs you! I’m an investor in the company and can introduce you to the founders.

If you have the skills and you’re ready to take it to the next level, send me an e-mail.

I’ll see you later today for a full post!

Growing Veggies on Mars

NASA intends to put the first man on Mars in the 2030’s. But once he’s there, what will he have for lunch?

Perhaps veggies grown in a BioPod.

This incredible new device from startup Interstellar Lab could finally allow us to cultivate crops in space. It could also revolutionize agriculture here on Earth.

The BioPod is an inflatable dome about 20 feet wide, 33 feet long, and 15 feet tall. It uses aeroponics, precision nutrient delivery, and careful climate control to produce the ideal growing environment for plants.

This means it can grow high value crops like flowers and microgreens. It can even grow plants that can’t be grown with traditional agriculture, like vanilla.

It’s also remarkably efficient, reducing water consumption by 98% while boosting yields up to 300-fold.

The BioPod is designed not just to feed humans in space, but on an increasingly unpredictable Earth. From a recent interview:

“Climate change is a real emergency for Earth, and we only have a small window to bring about positive change. We are developing a new framework for sustainable living on Earth and a testbed for future space missions,” Barbara Belvisi, Founder and CEO, Interstellar Lab said.

The BioPod is currently in production. You can even pre-order one now!

But at $250,000 each plus a monthly subscription fee, it’s a bit out of reach for most gardeners. Oh, and shipping’s not included.

However, if the BioPod can reduce inputs and boost yields as radically as Interstellar claims, I could see rapid adoption in the agriculture industry.

Already, companies like Bowery Farming are taking agriculture from farms to urban warehouses using hydroponics. They seem like a natural customer for Interstellar Lab, and I’m sure there are many more.

Long term, perhaps the BioPod will be deployed on Mars to support astronauts brought there by a SpaceX Starship. It’s a beautiful future I look forward to.

In the mean time, I’m itching to try a BioPod salad! 🙂

What do you think of the BioPod? Would you try its food?

Leave a comment at the bottom and let me know.

Have a great day everyone! 👋

More on tech:

Coffeebots and the Search for the Perfect Cup

Robot Pizzas and the Future of Fast Food

Male Contraception With an Ultrasound Device?

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Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

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I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order.