New York-based Tiger Global Management is taking a lot of heat for incurring one of the largest-ever losses by a hedge fund this year. Things could have been a lot worse for the tech-focused investor, which became the world’s busiest venture capitalist last year.

Paper losses at Tiger’s stock-picking arm are staggering. Its main hedge fund, which managed $20.5 billion at the end of 2021, was down 52% in the first five months. Its other large long-only stock fund fell 61.7%. Stumbles of this scale prompted the firm to cut its management fees, perhaps as a gesture of apology to its investors.

As the June quarter nears its end, all eyes will be on Tiger Global to see how much money it has lost. Its performance in the unicorn-picking arm, in particular, is the wild card.

Though it began as a hedge fund, Chase Coleman’s Tiger Global has supersized thanks to its venture capital business. As of October, Tiger Global managed about $95 billion—with its venture capital business accounting for around two-thirds of the total. The latest $12.7 billion fund, which closed in March, reportedly notched up double-digit net internal rate of returns since its inception last year.

A selloff in tech stocks and a freeze in initial public offerings will inevitably lead to write-downs in the firm’s startup stakes. In the first quarter, Tiger Global marked down its VC investments by about 9% in aggregate. While that is nothing compared to the hefty losses in the hedge fund business, more cuts are expected in the next few days.

Much of Tiger Global’s venture empire is based on paper gains. According to PitchBook, for funds that started in 2018 and later, over 90% of the value they created for investors were unrealized gains. The vintage year for Tiger’s two biggest and newest funds was 2021.

However, here is the beauty of investing in unlisted start-ups: There is no mark-to-market to speak of. So while a volatile Nasdaq bullwhips traditional hedge funds, prompting margin calls and sometimes forced selling, those who hide in the private space have more breathing room before the final reckoning comes.

If the 2000 dot-com crash provides any guide, Tiger Global might very well be able to get away with small write-downs for another quarter or two. The bear market back then also began early in the year, but it was not until the last quarter that VC funds had to mark down their portfolios, according to research provided by PitchBook.

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