Tiger Global Nears Deal to Sell Slice of Cohere Stake at $3 Billion Valuation
Tiger, facing a liquidity crunch as many of its public stock holdings have been pummeled, is in the process of selling shares in many of its portfolio companies, according to people familiar with the matter. The firm has also tried to sell stakes in the small venture capital funds it backed during the peak of the bull market, The Information previously reported. The Cohere sale would mark a small win for Tiger during an otherwise turbulent period for the firm.
Tiger Global Management is nearing a deal to sell part of its stake in OpenAI rival Cohere at a roughly $3 billion valuation, a markup of more than 40% from Cohere’s last financing round in June, according to people familiar with the matter.
Tiger is selling a stake of roughly 2.1% of Cohere for about $63 million, equal to the dollar amount of Tiger’s initial investment in Cohere, according to one of the people. Tiger will retain a roughly 5% stake in Cohere after the sale, the person said.
THE TAKEAWAY
- Tiger Global is selling a slice of its stake in Cohere at a profit, essentially pocketing the money it spent to initially invest in the OpenAI rival.
Cohere develops proprietary artificial intelligence models that can automate business tasks like generating emails, summarizing documents or searching for information. It competes with startups like Anthropic and OpenAI, as well as larger cloud providers, in selling businesses access to its technology.
Earlier this year, Cohere raised $270 million from investors including Oracle, Nvidia and Salesforce Ventures at a valuation of $2.2 billion. The company’s founding team includes former Google researchers, including CEO Aidan Gomez, who co-authored an influential paper that paved the way for the latest wave of image- and text-generating AI technologies.
Tiger’s stock sale would value Cohere’s shares at between $130 and $140 each, according to a person familiar with the matter, compared to the $95 a share valuation put on the company’s June Series C round and Series C extension.
Tiger has faced fundraising challenges, and in February it reportedly lowered the target of its next fund from $6 billion to $5 billion. As of June, Tiger had raised just $2.7 billion, according to securities filings. In 2021, the firm slashed the value of its private tech portfolio, according to its fundraising documents, which were reported by The Information.
Tiger first invested in Cohere as part of the company’s $125 million Series B round in December 2021 at an undisclosed valuation, according to PitchBook. John Curtius, a Tiger partner who left the firm in 2022, led the firm’s investment, which totaled $62.7 million, according to fundraising documents. Tiger is also an investor in highly valued companies like OpenAI and ByteDance, which could fetch high prices on the secondary markets.