[HN Gopher] Tiger Global: How to Win
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Tiger Global: How to Win
Author : imartin2k
Score : 78 points
Date : 2021-11-21 15:36 UTC (7 hours ago)
(HTM) web link (www.readthegeneralist.com)
(TXT) w3m dump (www.readthegeneralist.com)
| arbuge wrote:
| I wouldn't write off traditional VCs just yet. Traditional VCs
| like Sequoia and Bessemer have been through a tech bubble and the
| GFC and have the scars to show for it. Tiger has been investing
| in an incredible bull run in tech which has seen valuations now
| eclipse the first tech bubble in 2000. It remains to be seen
| whether things will burst in the same way or have a soft landing
| (or continue their upward march indefinitely!). It also remains
| to be seen what will happen to newer entrants like Tiger if
| things do turn south dramatically.
| math-dev wrote:
| Aren't these two points in contradiction with each other? Also
| not a good sign when adverts (this basically is one) hit the
| front page of HN
|
| 1/
|
| Founders may be sick of "hands-on" investors. Part of Tiger's
| pitch is that it will be an unobtrusive capital partner. That
| approach runs counter to industry norms as most firms compete to
| demonstrate a willingness to roll up their sleeves and help. The
| fact that so many founders find Tiger's laissez-faire attitude
| attractive exemplifies the lack of trust many have in VC's value
| propositions.
|
| 2/
|
| Hedge fund managers can bring novel perspectives to startups.
| Though perhaps less visionary than their venture capital
| counterparts, some founders find the detail and rigor of hedge
| fund managers' thinking refreshing.
| random_savv wrote:
| (1) sounds like micromanagement to me, whereas (2) sounds more
| hands off.
| math-dev wrote:
| Yeah, I can see that angle. I can imagine most VCs would say
| the same thing "we don't micromanage, its your company, but
| we will try to give you good ideas"
| cs702 wrote:
| According to the OP, which borrows liberally from an earlier
| piece by someone else[a], the way to win for VC firms is by
| investing more capital, faster, with less due diligence, and at
| higher (market-clearing) valuations than competitors. Just throw
| money at things that look, you know, like promising winners.
| Don't waste time on things like assessing risk.
|
| While in theory it's always possible to _lose_ money investing in
| startups (gasp), there is NO mention of that possibility in this
| article. The concept of _risk of loss_ appears to be... _foreign_
| to the author, I guess?
|
| Over the past six to seven decades, the US venture capital
| industry has gone through a handful of boom-and-bust cycles. For
| example, many VC funds that launched at the peak of the last
| major VC boom, in 1998-2000, ended up losing 50-100% of LP
| capital over the next decade.
|
| Perhaps all that "ancient" history is irrelevant now. Maybe
| there's no risk of loss anymore? Maybe this time it's different?
|
| --
|
| [a] See this comment:
| https://news.ycombinator.com/item?id=29297400
| melony wrote:
| Do GPs get sued if LPs lose money?
| funstuff007 wrote:
| When the fed is printing money hand over fist (and only has plans
| to slow down the printing press, not to reverse it), the way to
| win to is close your eyes and buy (almost everything) and
| quickly.
|
| https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
| exolymph wrote:
| More interesting: compare-contrast Tiger Global with SoftBank
| polote wrote:
| VC are annoyed because someone may show them that their due
| diligence is useless. But it is always funny to see that VC
| thinks their decision process is smart when in fact most of their
| portfolio will not return anything.
|
| Is VC really more efficient than giving money to anyone who has a
| master degree and some customers ?
| ttul wrote:
| An interesting story of disruption. Tiger Global offers lighter
| diligence, cheaper capital, and less oversight of its portfolio
| companies. Sounds like a great strategy for frothy times, but
| what happens when risk is "off" and tech is no longer bid
| endlessly higher?
| bansuian wrote:
| What happens? They will get less returns not zero. This is not
| a company in the traditional sense that they will go bankrupt
| so they will be fine.From the article, they are spreading the
| risk over various companies so there are going to be homeruns.
| They are also focusing on the growth stage not seed so at this
| point there are some signals on product market fit. Linking it
| to tech employment, its similar to engineers focusing on
| growing companies knowing that the chances of payout are high
| from stock options is high.
| m_ke wrote:
| Companies that raised 100s of millions from Tigers will survive
| and thrive while all of the cash strapped startups will go out
| of business.
| jmacd wrote:
| and they will buy great teams and some tech on the cheap.
| lmeyerov wrote:
| I think the real thing is they simply compete better than
| traditional VCs. If there is a deal, they find it faster, offer
| more money, less terms, less primadonna dancing, and are ready to
| close basically same/next day.
|
| In contrast, Tier 1/2 VCs are used to getting warm intros
| straight into their inbox, a subservient pitch, and hemming and
| hawing through their thesis process, friends process, and the
| same through their partners.
|
| So if the decision is ready by the time a TG partner talks with a
| founder, the process is flipped. The sense of enthusiasm and
| alignment is already there as is the sheer ability to do a deal:
| TG is chasing in one, and the founder pitching in the other. When
| TG reduces a financing to a bank loan / sale, and less talk of
| marriage, which would you rather, a 1mo-6mo 'process' that takes
| the CEO out of company operations, or a next day sure thing?
|
| There is truth to both, but the VC market is almost entirely
| firms that are nails on chalkboard for founders, and very few
| pre-approved-like as w TG. If you just need a deal and move on,
| they can win a ton.
| JumpCrisscross wrote:
| _The Information_ had a good article on this recently. In
| essence, starting a software start-up is less risky today than
| it was in VCs' heydays. This is particularly true for
| enterprise SaaS. That makes the sourcing side of VC easier,
| which enables scale. Tiger is bringing wholesale fundraising
| economies of scale to VC. If their thesis, that the mean risk
| of a software start-up is lower and randomly distributed, and
| that VCs' "value adds" in terms of coaching founders and
| picking start-ups is not worth the scaling cost, then they
| should replace VCs in this space. Counterfactual: Tiger has
| been investing in a historic bull market for technology
| companies.
| m_ke wrote:
| To summarize, most people need money, not VCs.
| m_ke wrote:
| How to Win: Outraise competition to buy market share
| [deleted]
| Lambent_Cactus wrote:
| Ugh, just read the original that this post rips off, which has
| all the analysis and none of the egregious over-writing.
|
| https://randle.substack.com/p/playing-different-games
| cusx wrote:
| No wonder I had the DejaVu feeling.
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