http://www.livemint.com/Companies/6r5vDGPSyMom9z5NRZ5FhO/Startups-look-for-new-backers-as-Tiger-Global-takes-back-se.html
“Tiger wants new investors to set the valuation in the next rounds; it doesn’t want to act as the lead investor in most cases,” said one of the three people cited above. “It is also pushing for a strategic stake sale wherever possible.”
Tiger, known for pushing through mergers among start-ups, is again trying to lead consolidation.
Industry experts say that Tiger has globally shown exits in 5-7 years time in most markets. India has panned out differently.
“Even if you take the China argument (that it takes time)—the gestation period in China was five to six years from the time a company gets funded,” said Kashyap Deorah, author of The Golden Tap, a story of hyperfunded start-ups in India.
The so-called signalling risk that Tiger carries is unrivalled in India’s start-up business; this risk is being exacerbated as the formerly aggressive investor is now urging its portfolio companies to find new backers.
If a firm, especially a deep-pocketed one such as Tiger, declines to back one of its early-stage start-ups in a later round of fundraising, potential new investors become wary of putting up money. Such a situation can become worse in times like these when capital isn’t easily available.
“It is inevitable that some of Tiger’s companies will fail. That is true with any investor. But the risk for a start-up is much higher when Tiger decides not to fund it anymore because it has such deep pockets and is hardly risk-averse,” one venture capitalist said on condition of anonymity.
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