Hedge funds continue to avoid private deals in technology, software, and the internet.
Firms that previously boasted large venture capital arms or a share class of hedge funds devoting a sizable chunk of capital to private companies and deals once again demonstrated almost no interest in making new investments in the third quarter, according to an analysis of data by Crunchbase.
Perhaps the only exception is Coatue Management. The firm made 11 new private investments in the third quarter through September 27, four fewer than the second quarter’s 15. But through the first nine months of this year, it has made 33 investments in private companies, already exceeding the total of 31 made in 2023, per the database.
However, Coatue still expects to come up significantly short of the 70 and 170 private investments it made, respectively, in 2022 and 2021, when it was the second-most-active hedge fund firm engaged in venture capital.
Coatue participated last week in the $80 million Series C financing round of Supabase, an open-source developer platform and Postgres database service, TechCrunch reports.
“It’s our privilege to continue to support the Supabase team on their journey to be the leading database management platform. Especially with growing demand from AI companies,” Coatue posted on its LinkedIn page. “Supabase is well positioned to support developers with their postgres databases, vector embeddings, and authentication tools.”
Coatue is now the most active firm in VC that is primarily known for its hedge fund. It has surpassed onetime leading VC player Tiger Global Management, whose efforts in the private markets have shriveled.
Tiger Global, headed by Chase Coleman, made only four new private investments in the third quarter — half of the eight deals it participated in during the second quarter, Crunchbase says. In total, it has made 17 private investments this year, compared with 289 private investments in 2022 and 345 in 2021. Altogether, it has made 1,180 private investments, according to Crunchbase’s count.
Tiger Global was the lead on three of its four third-quarter investments. Most recently, it made a $20 million Series B extension investment in LiquidStack, bringing the total funding round to $35 million for the provider of liquid cooling for data centers, the company says.
Maverick Ventures, the VC arm of Maverick Capital, made just one private investment in the third quarter, per Crunchbase. This compares with four the previous quarter and three in the first quarter. Even so, the eight deals this year are double the four Maverick made in 2023 but fewer than the 11 in 2022.
The only other hedge fund firm that previously made tech-oriented private investments and was active in the third quarter was D1 Capital Partners. It made three new investments during the most recent three-month period and has made five for the year — the same number of deals as in 2023. D1 participated in at least 20 private investments in 2022 and 76 in 2021.
Otherwise, no firm made a new investment in the quarter. In fact, Lone Pine Capital, which was late to private companies in the first place, last made a new investment in October 2022. Whale Rock Capital Management’s most recent investment came in February 2022, according to Crunchbase. Valiant Capital Partners has not made a new private investment since 2019, per the firm’s client reports.