Lumikai launches $50 million fund to back early-stage gaming startups

Lumikai founders Justin Keeling (left) and Salone Sehgal.

Lumikai, India's first gaming and interactive media-focused venture fund, has launched its second fund with an aim to raise $50 million to back early-stage startups in the country's burgeoning gaming industry.

The venture fund has already received nearly half of the fund corpus in an "oversubscribed first close" to date, it said in response to Moneycontrol's queries.

Apart from this, Lumikai stated that it has also set up a dedicated $10M AIF (Alternate Investment Fund) for Indian LPs (limited partners) to attract domestic Rupee Capital. This will bring Lumikai's total asset under management (AUM) to $100 million.

Among the investors in the fund are publicly listed Japanese gaming giants Mixi and Colopl, South Korean multi-billion-dollar conglomerates Krafton and Smilegate, Finland-based decacorn Supercell, and BSE-listed Nazara Technologies.

Several Indian family offices, including the Jeejeebhoys, KCT Group, DSP Kothari, and Sattva Group, as well as high-net-worth individuals such as Take-Two Interactive CEO Ben Feder, Napster CEO Jon Vlassopulos, Gulf Islamic Investments founder Pankaj Gupta, and Nodwin Gaming founder Akshat Rathee, also participated in the fundraise.

Lumikai, founded in 2020 by Salone Sehgal and Justin Keeling, typically invests in pre-seed to series A stage startups with cheque sizes ranging from $700,000 to $1.5 million. Some of its portfolio startups include Loco, Bombay Play, Studio Sirah, Eloelo, and Giga Fun Studios.

Sehgal told Moneycontrol that the capital will be used primarily for new investments and they currently have three new deals in the pipeline.

"Our thesis is always going to be the first institution in, and unearth opportunities that remain untapped or underserved by the market. On a very select basis, we could also potentially do follow-on rounds for fund one investments, provided they were being led by other investors" she said.

Read: Indian gaming studios see big action in 2022; take bolder, ambitious bets

With the new fund, Lumikai will invest across five key areas including gaming content, original IP from Indian studios that are building games for the Indian consumers as well as global audiences; user-generated content platforms and creator economy; and tools, technology and infrastructure, Keeling said.

Lumikai is also looking at companies that are leveraging “systems of play, applied game mechanics and leverage interactivity to disrupt value chains across legacy media, and sectors such as fintech and edtech" as well as startups working on cutting-edge technologies such as mixed reality, generative AI, virtual identities, and edge computing among others.

"We're expecting India over the next three to four years to become more of a net exporter of gaming content," Keeling said.

This fund comes at a time when India has been dubbed as the fastest-growing games market in Asia, both in terms of revenue and gamers, with its mobile and PC gaming revenue projected to reach $704.5 million in 2022, according to Niko Partners, a market research and consulting firm that covers video games, e-sports, and streaming in the continent.

This is set to grow at a five-year compound annual growth rate of 21.1 percent to touch $1.4 billion in 2026. This does not include revenue generated by real money games. About 34 percent of gamers in India spent money on non-RMG titles in 2022, the firm said.

India's overall gaming industry revenues increased from $2 billion in FY21 to $2.6 billion in FY22 and is expected to expand at a compound annual growth rate of 27 percent to $8.6 billion in FY27, as per a report by Lumikai.