Tiger Global Whimpers

Once roaring in India, Tiger Global now whimpers. After pouring millions into Flipkart, Lee Fixel of Tiger Global is now struggling to stabilize his big wager in Indian E-commerce. Lee Fixel heads the private equity side of Tiger Global; the other side is a hedge fund. Trading public equities is simpler than managing private companies, as Mr. Fixel has discovered.

Tiger Global started investing small in Flipkart in 2009 by backing founders Binny and Sachin Bansal. Since then, Mr. Fixel has invested approximately $700 million only to see his investment turn south, in part, due to poor execution by management and competition from Amazon. Then last year, Tiger Global, along with others, effectively took control by replacing the original Flipkart co-founders.

Tiger Global alumnus, Mr. Krishnamurthy took over as Chief Executive Officer while the Flipkart co-founders found other duties. So far, Flipkart has started to turn around, at least, from where it was last year. It’s reported that Flipkart is seeking additional funds from Microsoft, Tencent, Ebay, and Paypal, but raising money is currently difficult; many Indian Unicorns have received lower valuations as seen by Softbank’s write down of its Snapdeal and Ola investments.  

Mr. Fixel needs to wait longer for an exit either through an acquisition or public offering. Until then, he must continue to directly managed his Flipkart investment. As a former stock analyst, Mr. Fixel must be realizing that the private equity world is very different than public stock markets.

 

Buying a Black Swan at Flipkart

Investors take over company and kick out the founders. This happened last week in India and the story was surprising under-reported in the United States. Kalyan Krishnamurthy takes over as chief executive of Flipkart, a company owned in part by Tiger Global. The management shuffle could be seen as Tiger Global exerting more control of over its investment after years of passive investing in the Indian Tech scene.

The story is also important for the potential parallels with the US tech scene. Tiger Global is part of the trend of “outside” venture capital money flowing into Silicon Valley and the other Silicon Valleys of the world. This process has been happening here since DST Global’s initial investment in Facebook back in 2009.

In compressed time, the process has played out in India. Kashyap Deorah wrote about his book, The Golden Tap.  As money flowed, there were boom times. But as the money now recedes, there are markdowns, no new investors, and a funding winter descending upon India. Trouble in India might be what we will see in Silicon Valley. Already there has been no real exits through public offerings, but only paper gains for limited partners.

Silicon Valley lives within a bubble until it bursts. Money flows animate much of what happens in the Valley and surprisingly those flows are so often misunderstood and unnoticed. Most did not take notice of one company until the activist investor Starboard Value exerted influence over Yahoo.