Ex-Nazara CEO starts new web3 gaming startup, raises ₹160 crore

Former Nazara Technologies CEO Manish Agarwal and web3 investor Ishank Gupta have raised ₹160 crore (approx $20 million) in a seed round at a valuation of ₹1,200 crore (approx $150 million) for a new web3 gaming startup called Kratos Studios which they will operate under the IndiGG brand name. The seed round was led by Accel and included Prosus Ventures, Courtside Ventures, Nexus Venture Partners, Nazara, and Jet Ventures. 

Agarwal and Gupta have acquired the IndiGG brand name from Yield Guild Games (YGG) through a token swap, which is the transfer of digital tokens from one blockchain to another. Kratos has also acquired INDI tokens and will give their holders new tokens through a token generation event later. Until then, INDI tokens will continue to trade on exchanges.

IndiGG is a sub-DAO (decentralized autonomous organization) of YGG. It was started in 2022 with the backing of Polygon Studios to expand the play-to-earn (P2E) web3 gaming ecosystem in India. Game developers list quests on the platform and players participate to win the prize money. 

Before the acquisition of the IndiGG brand, Gupta was an advisor to it. 

Agarwal said he and Gupta will continue to work with Polygon’s co-founder Sandeep Nailwal and YGG’s co-founder Gabby Dizon to expand IndiGG and make it the world’s largest gaming DAO. 

“Bulk of the fund will go into building IndiGG operations which include tech stack, distribution, brand, and a large gamers community that can earn. We will also earmark some portion of it for investment in global web3 game developers,” said Agarwal. 

Agarwal added the new venture is not a fund and the objective of his new startup is to expand the P2E ecosystem and support developers who have the capability to build “great games” for it. 

“Our metric for IndiGG is the number of unique earners. Think of IndiGG as a freelancing platform for games where they are having fun, discovering new games, and also making money from the time spent on those games,” added Agarwal. 

Gupta pointed out that the IndiGG stack will partner with existing gaming micro-communities in South Asia, both on-ground and online, as sub-DAOs in the IndiGG ecosystem. “These micro-communities will facilitate explosive community growth for global Web3 games,” he added. 

Web3 gaming, which includes P2E games, is typically based on a blockchain network. Gamers are rewarded with tokens for participating or winning. In-game items in such games can also be purchased and traded as non-fungible tokens (NFTs) too.

India is one of the fastest-growing gaming markets in the world. According to a November report by gaming fund Lumikai, India has 507 million gamers and the gaming industry is expected to grow at a compound annual growth rate (CAGR) of 27% to reach $8.6 billion in FY27. 

However, web3 gaming is still in the nascent stages with limited adopters. 

“The top global games will have 300,000 weekly active users on the chain. The scale of web3 is very small. There are a lot of frictions to mass adoption. First is wallet creation. Gamers don’t want to be saddled with too much friction. The quality of web3 games has to improve because if the game is not fun people won’t play,” said Agarwal. 

With these concerns in mind, Agarwal added they are not expecting the new venture to turn huge amounts of revenue anytime soon. “It is a 5-7 year marathon. We have to solve some of these issues locally. It is the reason why a lot of publicly listed gaming companies globally have not come into web3,” said Agarwal. 

Kratos will monetize from IndiGG through transactions on the platform. “Developers will go to gamers and we will collect our fees for validation of tasks completed by gamers. We will also charge game developers for listing a quest,” said Agarwal. 

Gaming accounts for a major share of Web3 activity in India. According to Lumikai, 30% of the 450 Indian Web3 companies are from gaming. Mint reported last December that the funding in web3 gaming ventures in India grew sixfold in 2022 based on data shared by venture intelligence firm Tracxn.

“Blockchain can fundamentally transform gaming and accelerate the growth in emerging markets. We believe that this team is the best suited to unlock this value for Gamers. We are committed to building a vibrant gaming ecosystem alongside IndiGG,” said Subrata Mitra, Partner at Accel.