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Hedge Fund Firms Ramp Up Private Investing

Tiger Global Management is the most active hedge fund firm backing private companies this month, according to Crunchbase.

Firms best known for their hedge funds have been aggressively ramping up their investments in private companies, as investors watch for the next unicorn to go public.

At least nine of these firms, including Chase Coleman’s Tiger Global Management, have made 19 separate investments in private companies this month, according to data tracked by Crunchbase. That’s up from 13 private investments in March from six firms best known for their hedge funds.

Many of these investment firms have businesses or funds separate from their hedge funds that specialize in venture capital and private equity. The most active firm among this group has been Tiger, which last year raised its eleventh venture capital fund. 

Tiger has made at least five private investments so far this month, after making the same number in March, according to Crunchbase. For example, the firm this month invested about $90 million in Indian agritech startup Ninjacart, according to an April 24 report from Entrackr, a news site focused on technology startups.

Tiger also recently participated in the $420 million financing for cannabis vaporizer manufacturer Pax Labs, financial data provider PitchBook reported April 23. PitchBook said the company is now valued at $1.7 billion and cited an emailed statement from Pax confirming its valuation. 

That makes Pax a unicorn, or a startup company that’s worth at least $1billion. 

Tiger Global’s venture capital operation last year raised $3.75 billion for its Private Investment Partners XI fund, according to a person familiar with the matter. The firm’s hedge funds and long-only funds also allocate small portions of their equity to private companies as part of their strategies.

[II Deep Dive: Tiger Global Exceeds Expectations for New Venture Capital Fund]

The second most active firm with a hedge fund presence is Joseph Edelman’s Perceptive Advisors, with four private investments in April and one in March, according to Crunchbase. Last year the firm raised $200 million for its Perceptive Xontogeny Venture Fund and a related investment pool, Perceptive Xontogeny Venture SLP, to back life sciences companies at the earliest stage, according to a regulatory filing. 

The venture capital arms of Steven Cohen’s Point72 and Lee Ainslie III’s Maverick Capital — two other firms best known for their hedge funds — have each made at least two private investments this month, according to Crunchbase. Most of their recent investments are early-stage financings: series A or series B deals.

For example, Point72 Ventures co-led an $11 million aeries A financing for Extend, which digitally distributes corporate credit cards, according to an April 10 statement from the startup. Point72 also recently participated in the $30 million Series B financing of Vestwell, a digital retirement plan business that announced the funding early this month.

As for Maverick, the firm's venture capital arm participated in the $65 million series B financing of Cityblock, a health-care company focused on providing care to low-income neighborhoods, according to a TechCrunch report this month.

O. Andreas Halvorsen’s Viking Global Investors also made two private investments in April, according to Crunchbase. Keep in mind that in addition to a hedge fund and long-only fund, the firm manages a hybrid fund — Viking Global Opportunities — which invests in private companies as part of its strategy.

Viking most recently participated in the $13 million Series A financing for Checkerspot, which describes itself as a “materials innovation company,” according to an April 16 statement from the startup.

Even Stephen Mandel Jr.’s Lone Pine Capital, which has been much less active in private investing than many of the other firms known for their hedge funds, was involved in a venture financing round this month.

Lone Pine led the $114 million series E financing of Outreach, a sales engagement company, according to an announcement made by Outreach chief executive officer and co-founder Manny Medina. He said the company is now valued at $1.1 billion, making it a unicorn.

Other hedge fund firms, including the Two Sigma Investments and Deerfield Management Co., have made private investments this month, as well, according to Crunchbase.

Meanwhile, a giant unicorn in Silicon Valley is preparing for an initial public offering. San Francisco-based Uber Technologies could be valued at almost $84 billion based on the high end of the IPO price range that the ride-hailing company disclosed Friday in a regulatory filing. 

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