Last Monday (December 8), Tiger Global sent a letter to limited partners announcing their new $2.2 billion fund (PIP 17).
Buried in the letter was this line:
"Valuations are elevated and, in our view, sometimes unsupported by company fundamentals" and the firm needs to approach AI investments with "humility".
Wait! Let me get this straight.
Tiger Global is raising $2.2 billion specifically to invest in AI companies.
And in the SAME LETTER where they ask LPs for money, they're warning that the companies they plan to invest in are overvalued?
That's not a disclaimer. That's a confession.
The 59-sec takeaway:
When the firm that created the 2021 bubble admits the current market is overvalued IN THEIR OWN FUNDRAISING LETTER, that's not caution. That's a flashing red warning sign.
Tiger Global backed 315 startups in 2021 using "spray and pray" tactics, drove valuations to absurd levels, then watched their PIP 15 fund drop 15%+ (bottom 10% of all 2021 funds).
Now they're raising $2.2B (down from $12.7B) and admitting AI valuations are "unsupported by fundamentals" while still planning to invest heavily in AI.
Translation: They know it's a bubble, but they're betting they can time the exit before it pops.
The problem? Every bubble investor thinks they can time the exit. And the firm warning you about the bubble is the same firm that created the last one.
Read on for: The five signals that Tiger Global is both right and wrong, why "reformed bubble creators" are the worst market timers, and what founders/investors should actually do.
THE 5 SIGNALS INFORMING MY TAKE
Signal #1: Tiger Global's fund size collapsed 82%
PIP 15 (raised in 2021) was $12.7 billion.
PIP 16 (raised in 2024) targeted $6 billion but closed at $2.2 billion.
PIP 17 (raising now) is targeting $2.2 billion.
From $12.7B → $2.2B in 4 years. That's an 82% collapse in fund size.
What this means: LPs don't trust Tiger with big funds anymore. They'll give them $2.2B, but not $12.7B.
Signal #2: Tiger's 2021 fund is in the bottom 10% of all VC funds
PIP 15 recorded over 15% paper losses as of June 30, 2024, placing it in the bottom 10% of 2021-vintage funds.
Notable markdowns include: Superhuman (-45%), DuckDuckGo (-72%), OpenSea (-94%).
What this means: Tiger's 2021 "spray and pray" strategy destroyed value. They're not warning about bubbles from wisdom, they're warning from trauma.
Signal #3: Tiger's investment pace collapsed 97%
In 2021, Tiger backed 315 startups
In 2024, Tiger made only 9 private investments
From 315 → 9 deals. That's a 97% collapse in deal volume.
What this means: Tiger went from "invest in everything" to "invest in almost nothing." Is this caution? Or a restriction?
Signal #4: Tiger's current fund is up 33%... but only on paper
PIP 16 is up 33% year-to-date, driven entirely by OpenAI, Waymo, and Databricks stakes.
The largest positions in PIP 16 are OpenAI and Waymo.
What this means: Tiger's "comeback" is 100% dependent on 2-3 AI companies staying at inflated valuations. If OpenAI's $500B valuation crashes, Tiger's fund crashes with it.
Signal #5: Tiger is selling 85+ portfolio companies to double down on winners
Tiger has sold more than 85 companies from PIP 15, generating over $1 billion in proceeds to recycle into follow-on investments for winners like Revolut and ByteDance.
What this means: Tiger is abandoning the "diversified portfolio" strategy and going all-in on 5-10 companies. That sounds like desperation concentration to me.
WHAT EVERYONE ELSE THINKS
The consensus take:
"Tiger Global has learned their lesson. They're being cautious now. The new $2.2B fund shows discipline."
VCs are saying: "See? Even Tiger admits valuations are high. That's smart risk management."
Media headlines: "Tiger Global returns with humility and smaller fund."
LPs are thinking: "At least they're being honest about the risks."
Why that take is dangerously naive:
Everyone's praising Tiger for "admitting" the bubble.
Nobody's asking: Why are they raising $2.2B to invest in a market they're calling overvalued?
Even as Tiger Global raises a fresh fund to go after more big AI opportunities, it's implying that the AI market is in a bubble.
That's cognitive dissonance. Not caution.
"REFORMED BUBBLE CREATORS" ARE THE WORST MARKET TIMERS
Here's what's actually happening:
Tiger Global created the 2021 bubble with their $12.7B fund and 315 investments.
They got destroyed when it popped (PIP 15 down 15%+, bottom 10% of all funds).
Now they're doing the EXACT SAME THING. Just with AI instead of SaaS.
Here's why this is dangerous:
1. Tiger thinks they can time the AI bubble
Tiger warned that AI valuations remain elevated and in some cases not supported by fundamentals, calling for investor "humility" even as AI reshapes the venture landscape.
Translation: "We know it's a bubble, but we'll get out before it pops."
This is EXACTLY what they thought in 2021.
PIP 15 pumped cash into startups at a blinding pace largely at peak valuations.
They couldn't time the exit then. Why would they time it now?
2. Their "comeback" is 100% dependent on 2-3 companies
The largest positions in PIP 16 are OpenAI and Waymo, stakes that have helped performance rebound with 33% paper gains.
The most recent private fund, PIP 16, has invested 70% of its assets across 25 companies, with the 10 largest investments accounting for three-quarters of that total.
Math: 75% of their fund is in 10 companies. And most of that is OpenAI + Waymo.
If OpenAI's $500B valuation crashes (which many analysts predict), Tiger's "33% gains" become 50% losses overnight.
3. They're making the same mistakes, just more concentrated
2021 strategy: Spray and pray across 315 companies 2025 strategy: Concentrated bets on 10 companies
Both strategies assume perfect market timing.
The difference: In 2021, they had diversification. In 2025, they're all-in on AI.
This time it’s riskier.
4. The LP letter is a legal CYA, not actual caution
In its LP letter, Tiger warns that AI valuations are elevated, and sometimes "unsupported by company fundamentals." "Humility is required," the letter reads.
This isn't Tiger being humble.
This is Tiger's lawyers saying: "When this blows up, we warned you in the letter. You can't sue us."
If they were ACTUALLY cautious, they wouldn't raise $2.2B to invest in the sector they're warning about.
WHERE I COULD BE WRONG
My blind spot #1: Maybe Tiger DID learn and will actually time it correctly
Counter-argument: Tiger first backed OpenAI in 2021 at a valuation below $16 billion. It invested in Waymo that same year at around $39 billion. Those stakes now sit on sizable gains.
They got OpenAI at $16B (now $500B).
They got Waymo at $39B (now reportedly $80B+).
Maybe they DID learn how to pick the winners early.
If OpenAI, Waymo, and Databricks all successfully IPO or get acquired at current valuations, Tiger makes 3-5x on their fund.
That would prove their strategy works.
Why I'm skeptical: PIP 16 closed far below its $6 billion goal, signaling tighter liquidity and reduced support for struggling portfolio companies.
LPs don't believe Tiger can execute. That's why they cut the fund size by 65% (from $6B target to $2.2B close).
My blind spot #2: Maybe the AI bubble is different
Counter-argument: AI is a genuine platform shift (like internet in 1995).
The 2021 bubble was SaaS companies with no moats getting 30x revenue valuations.
AI infrastructure companies (OpenAI, Waymo, Databricks) have real technology, real revenue, and real defensibility.
Maybe $500B for OpenAI IS justified if they become the next Google.
Why I'm skeptical: The explosive growth of AI draws parallels with the dotcom bubble. Not all early AI winners will convert today's initial hype into long-term dominance, similar to the varied outcomes of first internet companies.
Everyone said Amazon was overvalued in 2000. They were right, Amazon dropped 95%.
But Amazon survived and became worth $2T.
The problem: For every Amazon, there were 100 Pets.coms.
Tiger is betting they picked the Amazons. History says they probably picked some Pets.coms.
My blind spot #3: Maybe smaller, concentrated funds DO perform better
Tiger wrote to investors: "Over our history, we have found that smaller, more concentrated funds have been correlated with our strongest returns".
Tiger achieved a 23% internal rate of return with its first 10 Private Investment Partners (PIP) funds, each managing under $3 billion and executing fewer than 50 deals.
Their data shows:
Small funds (<$3B) with <50 deals = 23% IRR.
Large funds ($10B+) with 315 deals = -15% returns.
Maybe they're right that smaller is better.
Why I'm skeptical: Those early funds (23% IRR) were deployed in 2001-2015, a completely different market.
Applying 2001-2015 lessons to 2025's AI bubble is like using 1999 internet lessons for 2021 SaaS. The fundamentals changed.
WHAT THIS MEANS FOR YOU
If you're a founder:
1. Treat all VC capital as temporary
Tiger backed 315 companies in 2021.
Tiger sold 85+ companies from PIP 15 after the crash.
Translation: 27% of their portfolio got abandoned.
If you raised from Tiger (or any mega-fund) in 2021-2022, assume they won't support your next round.
2. If you're in AI, raise NOW
PIP 17 is supported by the strong performance of PIP 16, benefiting from strategic positions in OpenAI, Waymo, and Databricks, which generated approximately 33% paper gains.
Tiger (and other VCs) are flush with paper gains from AI investments.
They'll deploy capital into AI for the next 6-12 months.
But once those paper gains turn to losses (when the bubble pops), AI funding will freeze.
Window: Q1-Q2 2026. After that, AI winter.
3. If you're NOT in AI, go profitable immediately
Tiger is investing in 9 companies per year (down from 315).
That means 306 fewer companies are getting funded.
If you're not one of the chosen few, you need to survive without VC capital.
If you're a VC:
1. Don't follow Tiger's playbook
PIP 15 is in the bottom 10% of 2021-vintage funds.
Tiger's strategy doesn't work. Don't copy it.
2. Accept that AI winners are already priced
Tiger's standout wins came from backing OpenAI at $16B (now $500B) and Waymo at $39B.
Those entry points are gone.
If you're investing in OpenAI at $500B, you need a 10x to make venture returns. That means OpenAI needs to be worth trillions.
Is that likely? Maybe. But it's not a venture bet. It's a growth equity bet.
3. Build M&A relationships, not IPO pipelines
Tiger sold 85+ companies to generate $1 billion in proceeds.
Your exits will be M&A, not IPO. Start building relationships with corporate development teams NOW.
Watch these signals in Q1 2026:
Tiger's fundraise success: If PIP 17 closes at $2.2B (target), LPs still believe. If it closes below $1.5B, LPs are fleeing.
OpenAI's valuation: If OpenAI raises at $200B+ in Q1 2026, the bubble inflates further. If they can't raise or raise at $120B (down round), bubble is popping.
Tiger's deal count: If Tiger makes 15-20 investments in 2026 (up from 9 in 2024), they're feeling confident. If they make <5, they're paralyzed by fear.
PIP 16 performance: If Tiger's 33% paper gains turn to losses in Q1 2026 (because AI valuations crash), their entire comeback narrative collapses.
Other mega-funds' behavior: If Sequoia, a16z, and Benchmark also start warning about AI valuations in their fundraising letters, that's market-wide consensus that the bubble is real.
My prediction:
Tiger's warning is correct: AI valuations ARE elevated and unsupported by fundamentals.
But Tiger's strategy is wrong: You can't time a bubble exit, especially when you're the one creating FOMO by deploying $2.2B.
What happens in 2026:
Q1-Q2: AI funding stays hot (Tiger and others deploy capital)
Q3: First major AI company misses revenue targets
Q4: Valuation corrections begin (OpenAI drops from $157B to $100B)
2027: AI winter, Tiger's PIP 17 posts losses, LPs demand reform AGAIN
We've seen this movie before. Tiger was the director in 2021. They're the director again in 2025.
Your turn.
Do you think Tiger learned their lesson? Or are they about to repeat the same mistakes with AI?
Reply with your take:
Are you raising from Tiger or other mega-funds?
Do you think OpenAI's $157B valuation is justified?
Where am I wrong?
Today's sources:
→ TechCrunch: Tiger Global Plans Cautious Venture Future With A New $2.2B Fund
→ CNBC: Tiger Global Launches New Fund Eyeing $2.2 Billion Raise
→ Asia Business Outlook: Tiger Global Launches $2.2B PIP 17 Fund Amid Portfolio Strain
→ Tech Startups: Tiger Global Launches New $2B-$3B VC Fund
→ IMP.NEWS: AI-Fueled, But Cautious: Inside Tiger Global's $2.2B Comeback
→ Startup Researcher: Tiger Global Raising $2.2B Fund Amid AI Bubble Concerns
→ IndexBox: Tiger Global Launches $2B PIP 17 Fund, Shifts to Concentrated Strategy
→ Business Review Live: Tiger Global Revives Early Strategy With New $2.2 Bn Venture Fund
→ Wellington Management: 2025 Venture Capital Outlook
See you next week,
Pavan
P.S. Tiger Global is subtly signaling that the AI sector may be approaching bubble territory. The same kind of environment it helped inflate in 2021. When the bubble creator warns you about the bubble WHILE raising money to invest in the bubble, that's not wisdom—that's the greater fool theory in action.
P.P.S. Fun fact: Tiger made 24 VC deals in 2024 compared to 315 in 2021. That's a 92% collapse in deal activity. If you're trying to raise from Tiger and they're not responding, it's not you—they're only investing in 2-3 companies per quarter now. Move on.