With tech performance in the public markets surging and a growing availability of late-stage capital, the number of private tech companies in the billion-dollar valuation club is on the rise. And among the growing group of investors competing for and winning deals to back tomorrow’s tech high-flyers are hedge funds and mutual funds.
While some venture investors like SoftTech VC’s Jeff Clavier have called the influx of new hedge fund money “scary,” the reality is that the extensive networks, public markets research experience and deep pockets of these asset management firms have won over many later-stage pre-IPO startups. For example, HotelTonight CEO Sam Shank told Business Insider of hedge fund backer Coatue Management:
“They have a uniqueness … they’re well-connected and really knowledgeable — they have a whole new pool for us to network in.”
From Valiant Capital Partners to T. Rowe Price, seven hedge fund and mutual fund firms (detailed below) have participated in 114 deals to tech startups totaling over $6.7 billion in disclosed funding since the start of 2010 based on CB Insights private company financing data. And these firms clearly ratcheted up deal activity in 2013 participating in just under 40 private tech deals versus fewer than 15 in 2010. While 2011 saw mutual fund and hedge fund managers dive into massive consumer tech financing rounds to companies like Groupon and Zynga, 2013 also saw funding levels with participation by these firms hit a four-year high.
By far the most active private tech investor of the money managers analyzed is Tiger Global Management, founded by Chase Coleman. In 2013 alone, Tiger Global completed over 20 disclosed deals to companies ranging from Warby Parker and Flipkart to Glassdoor and Nextdoor. Tiger Global has been among the most active firms in Asian eCommerce companies as well.
In our earlier research, we detailed that the billion dollar club of today is largely made up of consumer tech companies. And surging late-stage consumer tech valuations have been driven in part by the influx of Wall Street investors on Sand Hill Road. The table below highlights a range of tech valuations in recent funding rounds with participation by hedge funds and/or mutual funds, including a number of the startups now valued at $1B+ from Evernote to Pinterest.
The hedge funds and mutual funds analyzed for this research brief are detailed below. All of their underlying company & investor data can be found on the CB Insights venture capital database.
- Altimeter Capital
- Coatue Management
- Fidelity Investments
- Maverick Capital
- T. Rowe Price
- Tiger Global Management
- Valiant Capital Partners
Note: A spreadsheet of all the financing deals included in this analysis is available on the ‘Research’ tab, after logging into to CB Insights. This research is only available to customers with access to CB Insider.
This report was created with data from CB Insights’ emerging technology insights platform, which offers clarity into emerging tech and new business strategies through tools like:
- Earnings Transcripts Search Engine & Analytics to get an information edge on competitors’ and incumbents’ strategies
- Patent Analytics to see where innovation is happening next
- Company Mosaic Scores to evaluate startup health, based on our National Science Foundation-backed algorithm
- Business Relationships to quickly see a company’s competitors, partners, and more
- Market Sizing Tools to visualize market growth and spot the next big opportunity