Tiger Global has managed to raise only $2.7 billion out of the target fundraising of $6 billion. The New-York based investment fund faced troubles raising investments for its 16th private equity fund and the main reason is investors’ concern about valuations of technology companies. As per the report published by Financial Times, Tiger Global started fundraising campaign in October last year and is still seeking additional investments.

New York-based Insight Partners faced similar issues during its fundraising. Insight Partners could raise only $2 billion from the target amount of $20 billion. The inability of venture funds to raise money will have a severe impact on startup ecosystem. In India, we have witnessed decline in investments in startups. And, many startups have been pushed by investors to start showing profits in case they need more funds for expansion. Many startups in India are still not able to generate profits, something very common for startup firms during growth stage. Customer acquisition is a major trouble for many startups.

During first quarter of current year, US venture firms witnessed 73 percent decline in their fundraising plans. The trouble faced by banking sector in the US is another reason for investors to feel cautious. Another issue is high valuation of companies in technology sector.

Tiger Global manages assets worth $60 billion and the current fund was aiming to invest in undervalued companies. Technology company valuations are quite high at the current moment. And, with US recession fears, there is a strong chance that many technology companies may not perform well in the coming quarters.

In March 2022, Tiger Global raised $12.7 billion for its 15th fund. In the recent times, many VC firms have marked down their investment valuations in startups considering the tough business environment and current performance of startups.

SoftBank Group recently cut the valuations of its $48 billion Vision Fund 2 by 30 percent. In India, Tiger Global has invested nearly $6.5 billion. The company has helped startups like Zomato, Ola, Urban Company, BharatPe, Infra.Market, PolicyBazaar, CRED, ShareChat during investment rounds.

Tiger Global has been regarded as a successful venture capital firm in New York with the company having sizable investments in Alibaba, Coinbase, LinkedIn, Flipkart, Tik-Tok parent company Bytedance, fast fashion brand Shein and payments processor Stripe. Tiger Global has also been an investor in Waymo, Quora, Facebook and Glassdoor.

In the last one month, many technology companies have recovered from the decline in valuations. Otherwise, majority of PE funds were facing decline in their investments in technology sector. Tech-heavy Nasdaq touched it yearly high during the trading session on Friday. The recovery in technology stocks could be short-lived as the fears of US recession could take over in the coming weeks.

Indian startups are also facing trouble in raising funds. As per recent reports, the ticket size has reduced and some of the startups had to accept funding at much lower valuations compared to their original plans.