In the midst of what could be considered a funding winter, the gaming industry in India is experiencing a flurry of activity, with a surge in funding and mergers & acquisitions.
Some of the leading global funds actively investing in Indian gaming are Griffin Gaming Partners, the Makers Fund, Tiger Global, and more. Domestic funds active in the space are Kalaari Capital, Elevation, and Accel, to name a few.
Just last week, gaming and interactive media fund Lumikai announced the launch of its second fund targeting a $50 million corpus from global investors. The funds will be deployed in pre-seed to series A investment in India’s leading gaming and interactive media firms.
Investors in the fund include names like the Japan-based gaming giants Mixi and Colopl, South Korean conglomerates Krafton and Smilegate, Finland based decacorn (privately-held firms valued at $10 billion or more) Supercell, Indian gaming firm Nazara, and select large family offices including the Jeejeebhoys, the KCT Group, DSP Kothari, and the Sattva Group. Some high net-worth individuals (HNI) also participated in the fundraise, including Ben Feder (former CEO of Take Two Interactive), Jon Vlassopulos (CEO, Napster), Pankaj Gupta (founder, Gulf Islamic Investments), and Akshat Rathee (founder, Nodwin Gaming).
Indian gaming companies are spending their monies on a variety of initiatives, including acquiring new users, developing new games, and expanding into new markets, especially Southeast Asia and the Middle East. The common goal, however, is to capitalise on the growing demand for mobile gaming in India. As per Statista, the revenue in the Indian mobile games market is projected to reach $390.90 million in 2023, with an expected annual growth rate (CAGR) of 2.23 percent over 2023-2027, resulting in projected revenues of $427 million by 2027.
Nodwin Gaming, for instance, has raised $28 million at a $349 million post-money valuation from existing as well as new investors in their latest funding round this May. Existing investors included Nazara, Krafton and JetSynthesys, Sony Group Corporation, and Innopark.
“This funding round will provide the necessary fuel to continue our growth in emerging markets. We will look to add capability and capacity with a mix of build and buy decisions,” said Sidharth Kedia, CEO, Nodwin Gaming.
At approximately 80 percent CAGR since its inception close to nine years ago, Nodwin is primarily looking at increasing its global footprint. “Our core focus right now is to invest in emerging markets across the globe. Our definition of emerging markets is countries with a favourable youth demographic, high internet and smartphone penetration, which are mobile-first in terms of both gaming and media consumption’’, added Kedia.
Gaming start-up Giga Fun Studios raised $2.4 million in a seed round led by Fireside Ventures, while BuyStars raised $5 million in a pre-series A round from existing and new investors. TradingLeagues, a Bengaluru-based fantasy stock gaming firm, raised $3.5 million in a pre-Series A funding round led by Leo Capital.
Some companies that started this year are already looking at their next round of funding. Blockchain-based fantasy cricket platform Sportiqo for instance. Who’s interested?
“With our experience in the financial markets industry, we were able to secure 1.25 million, which went towards developing our product and user acquisition during the IPL. Currently, we are seeking Pre-Series A funding of around $1.5 million, which will sustain us for 12 to 18 months. We are in advanced discussions with investors and HNIs, including those from financial centers like Singapore,” said Anindya Kar, Co-Founder and Chief Product Officer, Sportiqo.
Per a latest Lumikai report, a majority of the $2.8 billion invested in the Indian gaming market came in the last 2.5 years. In the last two years, the market also saw over six strategic exits amounting to $775 million, the emergence of three unicorns. Games 24X7, Dream11,MPL and the public listing of Nazara Technologies.
So what do funds look for when they consider investing in a gaming company?
Salone Sehgal, Founding General Partner, Lumikai, explains.
“Investors first look at the founding team and the 5Cs — which are the team’s competence, clarity of vision and communication, curiosity, character, and commitment. Previous experience in the gaming industry and a deep understanding of global trends are also important,” she said.
Additionally, the traction, timing, and addressable market of the product or service being developed are crucial.
According to Sehgal, unlike other consumer tech sectors, gaming is not a solution, nor is it a must-have product, hence market evaluation is critical.
Gaming companies also require access to global best-practices, knowledge, and research and development.
“Investors with experience in the market have an edge in understanding and supporting gaming companies. Ultimately, investors assess how the company’s offerings position it against global competitors, as well as its potential for category leadership,” she added.
Interestingly, in a crowded market, relying solely on product innovation is no longer sufficient, experts said, adding that one has to now look at distribution and marketing as well.
Founders in the gaming industry are well aware that there is a constant influx of new games every month, making it essential to think deeply about marketing hooks. This is particularly true for products targeting the global market, where mobile game distribution can be particularly challenging.
Anirudh Pandita, founder at Loco, agrees. He said, “Our next round of funding will support monetisation efforts, technology infrastructure, and geographic expansion.”
Same applies for new companies too. Sportiqo said approximately 30 to 40 percent of its upcoming funding will be allocated for product development, and the remainder will be used for user acquisition, marketing, and brand building.–