- Tech hedge fund company Coatue Management has raised $700 million to make early-stage investments and recently hired Dan Rose to oversee it
Coatue Management — a technology hedge fund that invests in public and private companies — has reportedly raised $700 million for a venture fund to invest in early-stage startups, according to The Information. Coatue Management — which is led by brothers Philippe Laffont and Thomas Laffont — has also reportedly hired Dan Rose to oversee the fund. Prior to Coatue, Rose’s most recent position was VP of Partnerships at Facebook.
Early-stage investing can be risky since many of the companies at that stage are still developing revenue models to stabilize and the likelihood of going bust is higher. On top of that, the time it takes to receive a return on that investment tends to be much longer compared to later-stage investing. But the returns are significantly greater for these investors. The new Coatue fund has already invested in companies like AppZen, Persona, and Sigma.
The founders of Coatue had told The Information that they are interested to get into early-stage investing in order to compete with some of the most well-known venture firms in Silicon Valley. Coatue has already been able to benefit from late-stage investing in companies such as Grab, Lyft, Snap, and Uber. Plus Coatue are also investors in DoorDash, Lime, and Instacart.
Coatue now has $17 billion under management. And the firm utilizes data analytics for guiding their investments. The Information pointed out that Coatue spends over $30 million to buy data for its algorithms and about half of the investment team are engineers.
The Laffont brothers grew up in France and Philippe moved to the USA in order to attend MIT. He graduated with a computer science degree in 1989 and then spent three years working as a management consultant. From there, he decided to work at a company owned by the family of his future wife in Spain. While working in the basement of that company, Philippe had spent a lot of time following daily stock quotes in the newspaper. Around that time, Philippe and Thomas got hooked and they invested in companies like Microsoft and Intel in the mid-1990s.
Philippe then returned back to the U.S. to work with the goal of working in asset management. Philippe ended up working for free at a small tiny mutual fund company. And then through a friend, he was hired to work as an analyst at Tiger Management to work on European telecommunications stocks. After three years of working at Tiger, Philippe raised $45 million in 1999 and launched Coatue. Coatue is named after a beach off the coast of Nantucket.
Shortly after raising the first fund for Coatue, the Nasdaq crashed (dot-com bust). However, Philippe was able to circumvent major losses by going long on the most stable technology companies and short on companies that struggled to compete against businesses on the Internet. From there, he hired his brother Thomas — who was working as an agent for Hollywood actors at the time — to work at Coatue. Their father also temporarily worked as Coatue’s chief financial officer.
When the next major recession happened in 2008-2009, the Laffont brothers had $2.2 billion under management. And then they started ramping up the staff by bringing in 11 more analysts and 4 partners. While the fund saw a loss of more than 14% in 2008, the company was able to recover and raise even more money the following year.
Thomas began to oversee the Silicon Valley office of Coatue in 2012 and that started open the door for early-stage investments in tech companies like Box — which Coatue invested in at a $1.2 billion valuation. This strategy is similar to the one that his Philippe’s friend and rival Chase Coleman was (Tiger Global founder and partner) deploying at his investment company.
With a team of investment professionals and data science engineers, Coatue is poised to drive growth and see solid returns. “We envision a future where our data scientists and fundamental analysts sit side by side to formulate strong investment theses that are validated by data science,” wrote Philippe in a recent report via Bloomberg.
