Tiger Global's Shleifer matching Fixel’s appetite in India
Scott Shleifer, who spearheads Tiger’s entire private market portfolio, picking and closing deals at a rapid pace in Indian startups.
From backing the thriving consumer internet space to being bullish on cross-border enterprises and Software as a Service (SaaS) startups, the India outlook for one of the most influential technology funds has changed perceptibly under Scott Shleifer, the man who has taken over Tiger Global’s private equity portfolio from Lee Fixel, known for his early wager on Flipkart and Indian e-commerce in general.
Earlier this year, Fixel, the secretive, media shy fund manager announced abruptly that he was leaving by June-end after 13 years at the firm.
The 41-year-old Shleifer, who now spearheads Tiger’s entire private market portfolio, has taken the industry by surprise as he matches step-by-step Fixel and his deal making pace. Until now, Shleifer focused primarily on China , and had not directly invested in India. But it's different now with Fixel on his way out. Ninjacart, Zenoti, Sirion Labs, Clevertap, Cogoport, Bank Open, Ola Electric, Upstox, Moglix, Facilio, and Fyle — are all in talks or have already sealed funding from Tiger. This line of investment, which started to take shape while Fixel was still fronting India, has since gathered momentum under Shleifer.
“Shleifer is doing to B2B software what Fixel did to consumer internet back in the day,” says an early-stage venture capitalist who did not wish to be named. “He is taking the index approach to investing. SaaS multiples in the public space are very high, which is why they are getting exposure through private markets.” Freshworks, a cross-border firm which provides customer engagement software to enterprises and where Tiger got in early with a $50 million funding round, is preparing for an IPO in the US by next year. “Seeing the success of Freshworks, which is now valued at $1.5 billion, Shleifer senses a huge opportunity in this space,” said another person who has tracked the fund.
Tiger’s single largest cheque in India of $90 million this year came in April, when it backed agri-tech startup NinjaCart. The entire transaction took a mere 10 days to close, a continuation of dealmaker Fixel’s playbook of identifying potential investments, and then moving at lightning speed. This became the hallmark of Tiger's investments in 2015-16 when the fund closed 40 deals, as per research platform Tracxn.
Shleifer’s a macro, hands-off investor
Shleifer joined Tiger in 2002, the year it was founded by hedge fund superstar Chase Coleman, and earned his stripes with his China bets. He turned a $200 million investment in Chinese e-commerce company JD.com into a $5 billion plus net return for Tiger, the fund’s best venture win. The Wharton school alumnus’ other big Chinese pick includes ride-hailing major Didi Chuxing. “ He is more macro and hands off, unlike Fixel who was very involved in a few of his portfolio companies like Flipkart. He bets on category size, market leaders, the founder, and good economics and decides to pump capital,” says a person close to the fund.
Shleifer, who was as an analyst at Blackstone Group, cofounded Tiger Global’s global private equity business within a year of joining the firm. While most of his best VC investments have been in China, he has also had successes in Russia, such as Yandex and Mail.ru and in Latin America with online B2C travel agency Despegar.
For several years, Shleifer headed Tiger Global’s public equity business while remaining a portfolio manager in the VC business, which was led by Fixel. In May 2015, post an internal churn, Feroz Dewan, who was managing Tiger’s public market portfolio left the fund and Shleifer took over from him. Fixel, by then, had become the sole head of the firm’s private equity portfolio.
“The intent is to show that Fixel’s exit is not going to affect operations. Also, the deal flow is a lot less consumer-centric at this point with the focus being on revenue and tapping geographies outside of India,” pointed out the founder of a startup that has Tiger Global as an investor.
Even after recording a $3 billion exit from Flipkart after it was acquired by Walmart, Tiger Global moved away from the consumer segment knowing that it was a money pit. "Even Fixel understood that the Flipkart model of raising billions of dollars with no clear path to profitability was not what Tiger wanted to chase,” said a venture capitalist.
The Wall Street firm had grown bearish on the country’s startup ecosystem after the dizzying euphoria it unleashed in 2014-15 only to retreat thereafter. Tiger made minimal moves in India from 2016-18 as it became imperative for Fixel and the fund at large to return more than $1 billion it had sunk into Flipkart. “Shleifer has made big money for Tiger, so he is confident of his thesis for India,” a fund manager said, indicating how his belief in cross-border B2B and SaaS has changed the India approach for the firm.
(With inputs from Aditi Shrivastava in Bengaluru)