Dream Sports sets up $250 mn fund to invest in Indian startups

Dream Sports, which owns online fantasy sports firm Dream11, has made an initial allocation of $250 million for its corporate venture arm Dream Capital to invest in sports, gaming and fitness-tech startups. 

The evergreen fund will be financed from the balance sheet of Dream Sports, which also operates sports streaming and e-commerce platform FanCode, sports experiences platform DreamSetGo, and payment platform DreamPay, said Dev Bajaj, managing director of Dream Capital, in an interaction.  

Bajaj added that the fund is stage-agnostic and will back startups right from early to late stage. 

Dream Sports will look to increase the corpus size of the fund in the future, the company said.   

Dream Capital's corpus of $250 million signals the maturity of Indian unicorn startups that have reached a point to operate their own corporate venture arms or similar vehicles with a sizeable amount.  

Dream Capital’s corpus shadows the fund sizes of even Indian venture capital firms such as Stellaris Venture Partners and Chiratae Ventures, which have recently closed $225 million and $337 million, respectively, as part of their newest investment funds.

Notably, Dream Capital's corpus is also higher than the second fund of Wipro Ventures, the investment arm of IT services major Wipro, that was launched last year. 

Recently, even Indian unicorn Lenskart floated its Vision Fund of $20 million to invest in ancillary businesses.

Now, the venture arm of Dream Sports aims to make at least 15 early-stage bets and deploy a significant part of the present corpus in the next 12-24 months. It will take a ‘board observer’ seat in some of its portfolio investments.

Dream Capital has already started deploying its corpus, investing across eight companies including e-sports platform SoStronk and sports footwear and equipment brand Elevar.  

With the corpus, Dream Capital has also executed the acquisition of video game developer Rolocule, which has been rebranded as DreamGameStudios. 

The fund is also looking to do follow-on rounds in Dream Sports-incubated companies including FanCode and DreamSetGo.   

"We are flexible in our investment stage focus. We did not want to limit our cheque sizes because we do not want to miss out on great opportunities [...] But we will do an investment of at least $1 million (in companies) and our goal is to scale our portfolio companies to $100 million of annual revenues individually," explained Bajaj, who was previously a venture partner with Kalaari Capital, an early investor in Dream Sports. 

“Dream Capital is also open to co-investing with other venture capital firms, particularly at an early stage. We do not have a preference if we want to lead a round,” added Bajaj.   

Dream Capital will also make follow-on investments in companies incubated in its sports accelerator programme DreamX.   

Currently, with a team size of seven members, Dream Capital has also made fund-of-funds investments in global sports-tech venture capital firms, which will help its investee companies to tap international opportunities. 

“As a part of our global strategy, we have made investments in global sports and gaming funds. It is not a significant part of the present corpus though. The fund of funds strategy is primarily there because sometimes we don’t have coverage in certain areas. However, our strategy is largely focused towards Indian investments, as we focus on our global ambitions,” added Bajaj.   

He did not share specific details on the fund of funds, but said that Dream Capital could invest directly in startups outside India as well. 

Earlier this year, 2008-founded Dream Sports raised $400 million in new funding, led by global investors TCV, D1 Capital Partners and Falcon Edge, more than doubling its valuation to $5.5 billion in six months.   

Gross revenue of online fantasy sports operators nearly tripled to Rs 2,400 crore in the year ended 31 March 2020 from Rs 920 crore in the previous year, according to a FIFS-KPMG 2020 report.  

In the past several unicorn founders including OYO Hotels and Homes’ Ritesh Agarwal and Paytm’s Vijay Shekhar Sharma have floated their personal investment funds.