Dream Sports, the parent company of the wildly popular daily fantasy sports app Dream11 (think: 100 million+ users), recently raised $225 million at a $2.5 billion valuation in a round financed by Tiger Global Management, TPG Tech Adjacencies (TTAD), ChrysCapital and Footpath Ventures. And it isn’t the only Indian DFS operator to have raised venture capital in 2020—the Sequoia India-backed Mobile Premier League (MPL) closed a $90 million Series C round in September.
Manu Gambhir, president, enterprise division of Games24x7, the parent company of major Indian fantasy sports platform My11Circle, said VCs have invested $335 million into gaming startups in India this year, up from $25 million in 2015. The Games24x7 executive explained there are several reasons for the substantial growth in funding committed to the space. (Games24x7 is backed by Tiger Global and The Raine Group.) “There are roughly one billion cricket fans globally and India probably accounts for more or less 90% of those. [So], you take a huge market [and combine it with] the penetration of mobile devices, which is almost ubiquitous at this point. [Add] the penetration of digital payment [technology and the Bombay High Court’s ruling that deemed] fantasy cricket a game of skill, and therefore legal, [and you have created] the perfect storm,” he said. KPMG projects the Indian fantasy sports industry to be worth $3.7B by year-end 2024.
Our Take: The perfect storm is taking place simultaneously with the rise of the Indian middle class. “As [more Indians] have access to mobile internet (an estimated 850 million people), money and digital payment platforms ($10 billion was spent in 2019, up from $500 million in 2017), they [also] have access to disposable time—and they are spending that time on entertainment,” said Gambhir. Gaming companies, including DFS operators, have been among the beneficiaries—unlike sports betting outfits, since sports betting generally remains outlawed within the country (with a few small exceptions).
In 2019, the DFS industry in India generated roughly $125 million in revenue. This year, the roughly 140 Indian operators will draw a collective $330 million to the top line. The Games24x7 executive suggested that once the Indian market matures, it will rival the U.S. market in size: “The potential for growth [remains] enormous, and that is why the money is chasing it.” According to Crunchbase, Dream11 has raised $385 million to date; Mobile Premier League has raised $130.5 million. For comparison purposes, DraftKings has raised $719 million.
Sports betting and gaming are not the only sectors drawing investment interest in India. Over the last four or five years, there has been a lot of money invested across the Indian venture ecosystem and several companies have emerged. Flipkart (a local Amazon rival), digital wallet Paytm and Uber analogue Ola are among the notable success stories.
It’s reasonable to believe the daily fantasy market still has room to grow in India. DFS remains illegal in several Indian states (so there is literal room for expansion), and the Indian sports fan is getting access to—and has more time to watch—sports than ever before. While cricket is the country’s favorite sport, soccer fandom is growing rapidly and “other sports (think: hockey, basketball, volleyball, baseball and Kabbadi) are starting to come online,” said Gambhir. With more sports to build DFS products around, revenues should rise.
India’s top DFS operators (a list that includes Dream11, MPL and My11Circle) control roughly 95% of the market, and with around 140 companies playing in the space, consolidation is anticipated. Gambhir indicated the steep competition would also likely lead to significant innovation over the next 12 to 24 months, as companies look for ways to differentiate themselves in an attempt to gain—and retain—market share.
Dream11’s rise is remarkable when you consider the company had a $20 million valuation just a couple of years ago (they are now the title sponsor of the 2020 Indian Premier League tournament). While exponential growth in the number of users on its platform has turned the DFS operator into one of the leading companies in the country, Dream11 has since widened its ambitions—hence, the birth of Dream Sports. The business has expanded into merchandising, content production and distribution with the intention of creating an ‘end-to-end sports tech company’… Ultimately, they want to be a one-stop shop for sports fans.
(This story has been updated to correct the name of Manu Gambhir’s company as Games24x7, not Play Games24x7, add information on its financial backers and clarify that the name of the company’s fantasy sports product is My11Circle.)