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| Hey Insiders, Today we are bringing you an extra analysis of why Tiger Global is liquidating its portfolio stakes in the secondary market and how global agtech funding declined in Q1 while pre-money valuations rose. Scroll down for some quick hits, then let us know if you'd like to see more in future issues! Karan
p/karan-chafekar | |
| 1 | | Hedge fund, private equity, and venture capital investment firm Tiger Global is looking to liquidate its stakes in privately held companies through the secondary markets, sources informed FT. The New York-based investment firm's private company portfolio is estimated to be worth over $40B. Tiger Global has reportedly roped in an adviser to assist the firm with the liquidation. The firm could potentially liquidate its holdings in payments startup Stripe, software firm Databricks, and Chinese social media firm ByteDance. Tiger is amongst one of the many investment firms looking to encash their holdings in a bid to return money to its backers. As the year progresses, several investment firms will be looking to liquidate their stakes, possibly at heavy discounts, due to the inflationary pressures and uncertainty over exit options through IPO. Investors often expect to exit their investments after a company has made its public debut. However, the IPO market remains to be frozen, with several startups postponing their IPO plans. Global startups raised $21.5B through IPOs in Q1 2023, down 61% YoY. In the absence of IPO exit options, investment firms are turning to secondary markets to liquidate their stakes. Earlier this year, StepStone Group's partner Brian Borton claimed that VCs were trying to sell their stakes in other venture funds and startups at a discount of 40% to 60% over the net asset value. Some firms that were desperate to raise cash were selling their stakes at nearly 80% discount. Last year, investment firms liquidated stakes worth $105B in secondary markets, five times higher than a decade earlier, per a report published by Raymond James. In January, British fintech Revolut's shares were traded at $278 a piece in the secondary market, 55% lower than the $627 per share value from the firm's last funding round. Databricks shares were trading at a 26% discount to its previous round's valuation. 
Tiger's private stakes account for nearly two-thirds of its $60B assets. News about its stake liquidation comes as the firm incurred heavy losses on its hedge fund and VC fund. Tiger's $12.7B flagship fund posted a loss of 20%, per documents reviewed by The Information. Tiger's funds lost $23B of value in 2022, corresponding to an average 33% markdown in the value of funds. The losses were due to markdowns on the valuations of portfolio companies, including OpenSea, Bored Ape, Stripe, and ByteDance. The firm had to write off its entire investment into FTX and FTX.US after the crypto exchange declared bankruptcy. Considering the downturn, Tiger also lowered the fundraising target for its PIP 16 fund from $6B to $5B. 
The firm also faced losses on its hedge fund. Last year, Tiger's hedge fund and long-only fund plunged by 56% and 67%, respectively. In Q1 2023, Tiger was able to curb its losses slightly after reporting a 7.3% gain on its hedge fund after the rally in technology shares. Bloomberg estimates that the firm will need to record a gain of 144% on its hedge fund and 216% on its long-only fund to recoup losses. Today, PE firm Blackstone liquidated its stake in Indian SaaS startup IBS Software. Apax Partners acquired the stake for $450M. Per ET, Blackstone made a 3.5x return on its initial investment of $170M from 2015 when it acquired a 40% stake in the firm from General Atlantic. Earlier, Blackston was reportedly looking to liquidate the stake for $1.2B. |     | |
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| 2 | | 
In Q1 2023, global agtech startups raked in $1.9B in VC funding from 172 deals, per Pitchbook's latest Agtech report. Funding declined by 10% compared to the previous quarter. At this rate, funding for the sector is expected to fall short of 2022's totals by this year's end. Despite the challenging fundraising environment, median pre-money valuations of agtech startups increased 19.8% compared to last year to $16.5M. The uptick in valuations against a venture funding pullback indicates that investors are likely making follow-on investments into startups that are showing strong growth and robust business models that can weather the economic downturn. The notion is supported by Pitchbook's report, which shows a 33.4% increase in deal sizes in Q1 2023, suggesting that investors are focusing on "larger deals that are considered low risk" and likely postponing the riskier deals for later. Of the total funding deployed globally, $900M was raked in U.S.-based agtech startups from 61 deals. At its peak in 2021, U.S.-based agtech startups raked in $8.4B after dropping to $5.5B in 2022. Median pre-money valuations of U.S. agtech startups stabilized at $16.5M, dropping from its peak of nearly $23M in 2021. The pullback trend in the global agtech sector is in line with the overall funding dip across all VC funding. The VC funding pullback trend impacted indoor farming startups the most. So far this year, five startups have either gone bankrupt or ceased operations. In the U.S., ag biotech startups secured the most funding in the quarter at $489M, followed by precision ag startups at $209M. Globally, biological crop protection startups witnessed the largest increase in total investment. Major deals concluded during the first quarter include aquaculture technology startup eFishery's $150M late-stage funding round and livestock tracking solutions provider Halter's $85M Series C round. According to earlier reports, Indonesian startup eFishery was in talks with UAE's G42 Global Expansion Fund to raise $100M at a $1.2B valuation, triple its previous valuation of $400M. Exit activity in the agtech sector continued the trend from 2022, showing little signs of easing. Per Pitchbook, exits for agtech startups will likely remain subdued until the interest rates decrease and the IPO market reopens. In the recent quarter, there were 14 exits that generated $500M in value for investors. The majority of the exits were driven by M&A transactions, with Chinese livestock technology, robotics, and smart field equipment maker Mingjia Environmental Technology's public listing being the only notable IPO in the sector. Notable exits through M&A include farm management software maker Gaivota's $235M acquisition by Seedz Cayman and robotics and smart field equipment maker Augmenta's $110M acquisition by CNH Industrial. | | | |
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 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Aaron Crutchfield | |
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