MUMBAI/BENGALURU: Tiger Global Management , the most prolific backer of startups in India, has decided to tone down its current aggressive style here, several people aware of the thinking at the US firm said, in a reflection of the limits of its strategy so far as well as the changing investor mood.Tiger, which is based in New York with private investments led by Lee Fixel, is coming up with a two-track approach when it comes to giving money to companies in its portfolio, conversation with founders and investors reveal. The ones that are in leadership positions in the market can expect Fixel to keep his purse strings open, but not the laggards which have been told to fend for themselves.They must obtain validation from investors other than Tiger to lead new rounds and get unit economics right with positive operating margins. One of the founders who met Fixel recounted the conversation thus: "I will be leading very few investments in the next six to eight months, but if you use your cash and survive this cycle, then the pressure will ease out."Tiger, which is the main backer of India's most valuable startup Flipkart and owns significant stakes in the country's largest cab aggregator Ola, has invested around $2 billion (Rs 13,000 crore) in over 35 Indian companies. This year it has been even more active than in the past, but that has changed along with the onset of a more cautious mood about throwing large sums of money at consumer internet ventures."We have been investing in the discount game for the past five years and realized that there is still no clear winner in those markets," the same founder recalled Fixel, 35, as telling him, referring to Flipkart and Ola.Tiger has been the initiator of a strategy of handing consumer internet companies copious amounts of money that has been used to play the discounting game to win market share. But since last year, other hedge funds, deep-pocketed strategic investors like Soft-Bank and cash-rich Chinese internet companies have bulldozed their way into India and plied rivals with oodles of money. With rising concerns in India, and Silicon Valley , about startup valuations, Fixel appears to have concluded that the discounting game is a race to the bottom."In some ways, Tiger created the frenzy in India by pouring massive amounts into companies at valuations that weren't fully justified based on current traction. The return to business fundamentals was bound to happen," said Kartik Hosanagar, professor of technology and digital business at The Wharton School, University of Pennsylvania. A Tiger representative declined to comment for this story.Significantly, the change in strategy coincides with a season of money-raising (of up to $2.5 billion) for a new fund known as Tiger Global Private Investment Partners X. Tiger was expected to spend most of the money from a previous fund of $2.5 billion in India. This time, the India share is seen to be far lower."He is going to go slow on India going forward. He has basically told all portfolio companies that if you cannot raise funding externally then I will not invest," said a venture capital investor who has several co-investments with Tiger.Aggressive early-stage deal-making by Tiger during early 2015 changed the dynamics of that market, inflating deal sizes across Series A and Series B rounds. In 2015, Tiger made at least 38 investments, including follow-on rounds, according to data from VCCEdge.This pace of deal-making compares to a total of 18 deals in 2014, 10 deals in 2013 and eight deals in 2012. Among the companies to have received money from Tiger in the recent past are Freshdesk, Flipkart, Ola, Grey Orange, Limeroad, Roposo and News In Shorts."He (Fixel) is not supporting companies which have a high burn rate and are not going anywhere," said another venture capital manager who has co-investments with Tiger Global. "He will consolidate his portfolio."Some of this consolidation, which many industry observers feel could also be a part of the natural cycle currently, has already started playing out in the Tiger portfolio as well. Horizontal classifieds player Quikr is in talks to acquire CommonFloor, while Make-MyTrip acquired a significant minority stake in HolidayIQ. All four companies count Tiger Global as a significant investor, though it is not clear what role Tiger played in the deals.Several segments where Tiger has portfolio companies like online retailing, hyperlocal services and delivery, budget hotels, are also headed for consolidation."The local services industry is in its nascent stages and overcrowded right now. But early 2016 will be an interesting year for all of us and we will see investors joining hands and consolidation starting. By the end of 2016, just two or three large players will be prevailing in this space," said Aditya Rao, founder of LocalOye, a local services provider.This change in approach could have an impact on pace and type of deal-making in the Indian startup ecosystem, even as overall venture capital deals start showing early signs of cooling off. Total venture capital dollars and deals already hit a new low in October.The move to reduce exposure could be driven by the fact that the India portfolio still has not started yielding returns for the firm."Headquarters probably wants to see some returns. Also, Tiger has now been on the board of several Indian companies long enough to notice some common worrisome patterns. They need to get some of their companies ready for a potential exit via an IPO," said Wharton's Hosanagar.Sources familiar with Fixel's thinking also said that several mid-stage portfolio companies where Tiger has led multiple follow-on rounds were still not able to break out, which is the reason why he is not keen on leading more rounds in them.Besides, two of Tiger Global's major investments — Flipkart and Ola — are facing stiff competition from global rivals Amazon and Uber, respectively. This battle has led both companies to raise large amounts of capital. Since 2014, Flipkart has raised $2.6 billion and Ola has mopped up $1.15 billion."I am going to be consolidating a considerable part of my Indian portfolio this year. I think I entered India two years early," Fixel reportedly said to the founder of an ecommerce company that his firm has backed.(With inputs from Nirupama Venkatraman in Bengaluru)