Dream11 becomes India’s first gaming unicorn with investment from Steadview Capital

Dream11 Fantasy Pvt. Ltd has become the first gaming unicorn in India with Hong Kong-based hedge fund Steadview Capital completing its investment in the fantasy sports platform through a secondary share purchase, the Mumbai-based company said in a statement.

The company's announcement of becoming a unicorn--a privately held startup valued at over $1 billion--comes a little more than a month after TechCircle first reported that negotiations were underway between Steadview and Dream11 for an investment that would the value gaming startup between $1.3 billion and $1.5 billion.

“Dream11 is poised to become the leading sports company in India catering to everything a sports fan needs…The company’s phenomenal growth track-record, dominant leadership in daily fantasy gaming and strong engagement metrics is a testament to the consumer love for the platform,” said Ravi Mehta, managing director at Steadview.

According to a report by The Economic Times, Dream11 investors Kalaari Capital, Multiples Alternate Asset Management and Think Investments sold part of their shares to Steadview. The report pegged the deal size at $60 million.

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

Dream11 was founded in 2007 by Jain and Bhavit Sheth. It runs a fantasy leagues for cricket, football, kabaddi, basketball and 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.

In an interaction with TechCircle last month, Jain claimed the company hit a user base of 50 million in February, 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 said. "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 thanks to growing use of smartphones in the past ten years. In turn, games have emerged as the key driver of mobile app growth globally. In addition, tariff wars between telecom operators over the past couple of years have made data 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. Most recently, e-sports startup GamingMonk Entertainment Pvt. Ltd raised $100,000 from Japanese firm GameWith, Inc., which owns and operates a game information website. Last year in October, it raised Rs 4 crore in a fresh round of funding from Japanese seed investment firm Incubate Fund and outgoing Google India managing director Rajan Anandan.

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.

Last year, Mumbai-based Nazara Technologies Ltd acquired a 55% stake in Gurugram-based e-sports platform Nodwin Gaming.

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.