Games24x7 sets up a Rs 400 crore corporate venture fund; plans to back interactive entertainment startups

Games24x7 co-founders Bhavin Pandya (L) and Trivikraman Thampy (R)

Skill-based gaming company Games24x7 has on November 1 announced the setting up of a corporate venture capital arm with a corpus of Rs 400 crore to back early-stage startups in the interactive entertainment space in India over the next five years.

With this, Games24x7 joins its peers such as Dream11 parent Dream Sports and WinZO who have set up similar funds to back startups in the country.

Called Games24x7 Ventures, the unit will back startups in the areas of online gaming, sports tech, esports, marketing technology, digital content, digital communities, and deep tech startups that support the development of the industry, chief financial officer Rahul Tewari told Moneycontrol.

He said they will look at companies that have proof of revenue or are already generating revenue and will invest up to $3 million (around Rs 25 crore) in each startup. Games24x7 will finance the entire corpus from its balance sheet.

"We believe that we are very well positioned to support early-stage companies beyond just capital. Our ROI (return on investment) focused mindset, intense customer focus, and scientific operating methodology of scaling topline while preserving sound unit economics would be very beneficial in partnering with founders in building hyper-growth companies which will endure" said co-founder Trivikraman Thampy in a statement.

Tewari said they bring in a "unique blend" of access to patient capital along with value additions in areas such as product development, data science, marketing automation and user growth, and monetization to help young founders scale their ventures.

Founded in 2006 by Thampy and Bhavin Pandya, Games24x7 currently operates a portfolio of skill-based gaming platforms including RummyCircle (Online Rummy), My11Circle (Fantasy Sports), and U Games (Casual Games).

The startup has previously made a strategic investment in CricHeroes, a digital player-focused platform targeted at the grassroots cricket ecosystem, in August 2021.

Games24x7 had raised $75 million in funding led by Malabar Investment and participation from existing investors Tiger Global and Raine Group at a $2.5 billion valuation in March 2022, marking its entry into India's startup unicorn club. It claims to have more than 100 million users and has offices in Bengaluru, New Delhi, Miami, and Philadelphia.

"There's a tremendous opportunity to invest in the interactive entertainment space in India, which is going through a big transformation in itself. And the transformation is because people are looking for personalized and immersive entertainment in an anytime, anywhere fashion. That's where we see a tremendous spurt in entrepreneurial action in the country" Tewari said.

Tewari said they don't intend to play a minority passive role, but rather have a "closer, tighter partnership" with its investee companies.

"We are looking at this as a two-way partnership with potential companies. We can add to the startup's growth but at the same time, benefit from some of the cutting-edge technology products, and new business models that are emerging in this space" he said.

Tewari also mentioned that their methodology of scaling businesses while being financially disciplined could also benefit their portfolio startups.

"in the current environment where it has become slightly tougher to raise capital, we think instilling (financial) discipline early on in our investee companies will be a game changer for young entrepreneurs so that they can scale their business with more confidence," he said.