Tiger Global-backed Games24x7 introduces Rs 400-crore fund for early-stage startups
Online gaming unicorn Games24x7 is launching a Rs 400-crore investment fund – Games 24x7 Ventures – to explore early-stage targets in the interactive entertainment space.
The fund will focus on investing in startups that have synergies with the company’s core business areas.
Tiger Global-backed Games24x7, which operates platforms including My11Circle and RummyCircle, raised $75 million earlier this year at a valuation of $2.5 billion.
Chief financial officer Rahul Tewari said that it would fund the new investment vehicle from its own balance sheet.
“This is a long-term commitment over the next five years to partner with emerging companies and entrepreneurs and support them not only with capital but also with our operating expertise and a unique way of scaling up our operations in a very disciplined manner while maintaining unit economics…,” Tewari said.
He said technologies such as 5G could disrupt the sector and immersive entertainment would transform the customer experience.
“…because we understand the Indian consumer and have in-house technologies and products that the consumer wants, we are very well positioned to hand-hold younger companies operationally. We have tremendous capability in marketing automation, data science, and on the product development side,” he added.
Last year, rival Dream Sports, which manages the Dream11 platform, set up a corporate venture arm with a corpus of $250 million in a bid to become a sports technology conglomerate. Dream Capital was launched to bet on early-stage startups in sports, gaming and fitness technology.
In addition to exploring new technologies and products through the investment fund, Games24x7 is also looking to diversify its business through mergers and acquisitions.
“Diversification is happening – operational diversification is under way on the platform, but this fund, in itself, will not deliver it because it is going to be a vehicle for making minority investments. We will benefit by getting access to new business models and learning about emerging technologies and products in the space. Diversification will not happen through this fund, that will happen through M&As,” Tewari said.
A high-level inter-ministerial panel recently submitted a report seeking the creation of a central law and a regulatory body to classify online games, either based on skill or chance.
As per an earlier report, the Law Committee under the Goods and Services Tax (GST) Council, which is deliberating the taxation angle to online gaming, believes clear definitions of “games of chance” and “games of skill” are a must before deciding how to tax online gaming and betting.
According to a KPMG report, India had 433 million online gamers in the financial year (FY) 2021, and that is expected to grow to 657 million by FY25.
The revenue of the online gaming industry stood at Rs 13,600 crore in FY21, to which casual gamers contributed Rs 6,020 crore. This is expected to increase to Rs 29,000 crore by FY25, with casual gamers contributing Rs 16,900 crore.
“We are hoping for more clarity; but the government is taking a lot of progressive steps. There is a lot of noise, but we are hoping that through deliberations with different arms of the government, we will be able to set in motion a regulatory regime that is eventually going to attract more investment and promote more entrepreneurship in the space,” Tewari said.
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