Amid a flood of big financing rounds for Canadian tech firms this year, a set of three in recent weeks signals the arrival of one of the world’s most aggressive tech investors. New York-based Tiger Global Management, which has made a spate of rapid, big-money investments in private tech companies, is now doing deals in Canada, bringing to the country a disruptive strategy that has roiled Silicon Valley venture capitalists.   

Tiger has earned a reputation for moving fast and supporting large valuations. Canadian VCs say its arrival reflects the growth of the country’s tech ecosystem. “Tiger is investing aggressively in what it thinks can be category-defining companies,” said David Stein, the Toronto-based managing partner of VC firm Leaders Fund. “We’re starting to see more of a pipeline of companies in Canada that could fit that bill.”

Chase Coleman founded Tiger as a hedge fund in 2001, and it established a private equity business two years later. The US$65-billion asset manager’s U.S. portfolio firms include Instacart, Scale AI and Stripe. The firm is also a major player in the Chinese and Indian tech markets, backing e-commerce platforms JD.com and Flipkart and ride-hailing apps Didi Chuxing and Ola Cabs; Tiger has offices in Bangalore, Beijing, Hong Kong and Singapore. 

It has participated in 125 deals so far this year, 101 of them rounds of US$50 million or more, according to PitchBook data. Three were Canadian, all in May: Toronto chatbot company Ada’s US$130-million Series C; Vancouver sales tool Dooly’s US$80-million Series B; and Toronto quantum computing firm Xanadu’s US$100-million Series B. 

Canadian venture capitalists who’ve been at the table with Tiger say its aggressive reputation bears out. “Entrepreneurs obviously love it, because you have an investor that can just move very quickly and perhaps doesn’t care about squeezing [the] last penny out of a valuation,” said Boris Wertz, Vancouver-based general partner at Version One Ventures. Both firms have backed Ada (as has Leaders) and New York-headquartered Cape Privacy. 

“I don’t think there’s a one-size-fits-all philosophy for what the ideal investor is,” said Ada CEO Mike Murchison. He had known John Curtius, the Tiger partner who leads its software-investing practice, for a couple years prior to the latest round. “They move very quickly,” said Murchison. “Their biggest advantage is their speed.” 

Ada was also attracted by Tiger’s relationship with “Big Three” management consultancy Bain & Company, which provides advice to the asset manager’s portfolio companies. “Being able to work with Bain on a lot of strategic projects is definitely valuable, especially for things that are true consulting projects, like pricing and packaging analysis,” said Murchison.

Venture capitalists say Tiger is typically hands-off with the companies in which it invests, forgoing board seats, which makes it attractive to late-stage firms that already have several major investors. “You get money from a platform [that is] very predictable in its due diligence [and] its speed of execution,” said Wertz. “Don’t expect the fuzziness of … a super-close partnership.” 

Tiger declined to comment for this story. 

The firm closed its nearly US$6.7-billion 13th fund in March, and is already working to raise another US$10-billion vehicle. The same month, The Information reported that Tiger’s quick moves and tolerance for high prices were shutting established VCs out of deals. It’s led about half the rounds it’s invested in this year, PitchBook shows. 

In the three Canadian megadeals, however, Tiger was “a follower,” noted Jim Orlando, managing partner of Toronto-based Wittington Ventures. Boston-headquartered Spark Capital led the Ada and Dooly rounds, while San Francisco-based Bessemer Venture Partners spearheaded the Xanadu investor group. Tiger frequently shares deals with both firms. The asset manager is “piggybacking on the work of another firm, who has done a lot more diligence,” said an investor active in the Canadian tech sector, to whom The Logic has granted anonymity because they work with the funds.  

By participating in Series B or earlier rounds, megafunds “are creating a set of options in what they believe could be future high fliers,” said Stein. The firm gets an inside look at how the startup is performing, and preserves the ability to “invest a lot more as the company grows and shows its traction.” Addition, a firm formed by a former top Tiger executive, also participated in the Dooly round.

Murchison described Tiger’s philosophy as making sure they’re “in all the winners that [they] can be.”

Venture capitalists say it’s unlikely Tiger is pursuing a Canada-specific strategy; instead, its arrival reflects the growth of the country’s private tech sector. (Its only other disclosed deal here was co-leading a US$7.5-million seed round for Vancouver’s CTO.ai in November 2019).

Orlando contrasted Tiger’s recent Canadian moves with those of SoftBank a few years ago. At the time, the Tokyo-based firm’s US$100-billion Vision Fund was similarly disrupting traditional tech investors by racking up huge rounds in potential and confirmed unicorns. But in October 2019, a company executive told the Financial Post that Canadian companies were mostly too small to warrant its capital. “The fact that [Tiger has] invested in Canada speaks to the opportunities here around these sizable deals,” said Orlando.

The first quarter of 2021 was the biggest on record for venture capital funding, according to the Canadian Venture Capital & Private Equity Association, with 16 “megadeals” of $50 million or more. Domestic firms Inovia Capital (Snapcommerce, Symend) and Georgian (Top Hat), which have recently raised big new late-stage funds, led some major rounds. But so did giant U.S. public-market investors that hadn’t previously been very active in Canadian private tech, including Coatue Management (Dapper Labs) and T. Rowe Price (Clio). 

Capital from U.S. VC, PE and hedge funds is “flowing on a global basis outside of its home market … and Canada is enjoying the benefits of that,” said Orlando. The pandemic has made investors more comfortable with remote deals, particularly at the late stage, where a company has earlier backers, customers, and performance metrics that can be consulted.

“For most of these internet companies, the world is the market,” said Wertz. So “it doesn’t really make sense to define investing geographically.” In April, his previously North America-focused Version One announced it would fund companies anywhere in the world.

U.S. VCs have expressed concern that Tiger and other giant asset managers are overpaying for deals, amid broader worries about inflated valuations. Prices have also increased in Canada. “Two years ago [at] the Series C mark, we were talking about ranges around a $300-million to $400-million valuation, and now we’re talking about $600 [million] to $700 million-plus,” said Nayla Chebli, investment director at the Caisse de dépôt et placement du Québec, at an event hosted by The Logic last month.  

But some Canadian VCs say the market disruption created by Tiger and its species of fast-moving investment giants should prompt funds to rethink how they operate. “You need to prove on a daily basis that you can win a deal, move fast and provide value to your entrepreneurs,” said Wertz.