Exclusive: Dream11 eyes tag of India’s first gaming unicorn

Dream11 could soon vault into the unicorn club with Hong Kong-based hedge fund Steadview Capital set to bet more than $100 million (Rs 710 crore at the current exchange rate) on the fantasy gaming startup, two people familiar with the development told TechCircle.

Negotiations are currently underway for an investment that will likely value Dream11 at anywhere between $1.3 billion and $1.5 billion post-money, one of the people cited above said on the condition of anonymity. Privately-held companies valued at more than $1 billion are considered unicorns.

It was not immediately clear whether the deal will be a primary or secondary transaction or a combination of both.

Dream11 co-founder and chief executive officer Harsh Jain told TechCircle that no primary fundraising was on the cards.

“We have no interest in raising any more money in the near future,” Jain said. “There's no primary fundraising that's going on at all. Secondary transactions, on the other hand, can happen throughout.”

Should a deal be finalised at the valuations mentioned above, it would make Mumbai-based Dream11 the first gaming unicorn to emerge from India.

A second person said that Steadview Capital will be the sole investor in this round.

Email queries sent to Steadview Capital did not yield a response till the time of publishing this report.

The latest development comes months after Chinese conglomerate Tencent Holdings had led a Series D investment of $100 million in Dream11. Existing investors venture capital firm Kalaari Capital and private equity firm Multiples Alternate Asset Management had also participated in the round.

“We want to focus on actually utilising the money that we raised in September in our Series D round,” said Jain. “We have not even started utilising that money and 23 will use all that money for the coming IPL (Indian Premier League) and [cricket] World Cup,”

Owned and operated by Dream11 Fantasy Pvt. Ltd, the company was founded in 2007 by Jain and Bhavit Sheth.  

Dream11 runs a successful fantasy league for cricket, among other sports. The platform offers content in vernacular languages. It allows users to create virtual teams comprising real-life players and lets them organise a match based on statistical performances of those players in actual games. The platform offers fantasy football, kabaddi and basketball leagues as well.

Last month, Dream11 claimed to have hit a user base of 50 million, more than doubling its user base from 20 million in February 2018. 

“We already have 50 million users and we want to add 50 more which is a huge challenge,” Jain told TechCircle. "We have an audacious target of reaching to 100 million users by this year itself.” 

Dream11 is the official fantasy game partner of the International Council of Cricket (ICC), Pro Kabaddi League, Indian Super League, National Basketball Association, Caribbean Premier League, International Hockey Federation and Big Bash League.

The business of gaming has grown substantially in India over the past few years after overcoming a phase of self-doubt and investor apathy. 

Digital gaming’s popularity in India has risen largely on the back the widespread use of smartphones in the last ten years. Many game developers are capitalising on the growth in smartphone usage to build their businesses. In turn, games have emerged as the key driver of mobile app growth globally.

In addition, while the price and accessibility of mobile data were once stumbling blocks, tariff wars between telecom operators over the past couple of years has made the commodity much cheaper in India.

Close to 100 million Indians will play fantasy sport by the end of this year, according to a joint report by Indian Federation of Sports Gaming and market research firm AC Nielsen. Dream11 chief executive Harsh Jain is also the chairman of IFSG.

Fantasy sport has had its brush with the law in the past. But Dream11 and others in the segment received a shot in the arm in 2017 when the Punjab and Haryana High Court observed that fantasy games cannot be considered gambling as they require considerable skill and judgment.

The move encouraged investors to bet on fantasy gaming startups. In December last year, TechCircle reported that Mumbai-based fantasy sports startup Halaplay Technologies Pvt Ltd was in line to secure $5 million in a Series A funding round led by existing investors Kae Capital and Nazara Technologies.  

LeagueSX Entertainment Pvt. Ltd, which operates an eponymous fantasy football site, raised an undisclosed amount from investors including LimeRoad co-founder Prashant Malik and Kraftly business chief Akshay Gulati last September. 

Steadview Capital

Steadview is an alternative asset manager that makes concentrated long-term investments across multiple industries. Its investor pool includes family offices, endowments, foundations, sovereign wealth funds, and pension funds.

The hedge fund has made several high-profile bets on Indian startups in recent months.

In January, Steadview Capital topped up its investment in ANI Technologies Pvt. Ltd, which operates cab-hailing unicorn Ola.

Last November, Steadview had led a Series D investment of $50 million in home services marketplace UrbanClap.

A month before that, SteadView had invested $30 million in fintech startup INDwealth, which is led by Ashish Kashyap who founded travel booking firm Ibibo Group.