From mobile screens straight to the cricket field, it is time for some real action for fantasy gaming startup Dream11 that edged out edtech firms like Bjyu's and Unacademy to emerge as the title sponsor of this year’s Indian Premier League (IPL), the domestic Twenty 20 tournament.
Dream11 is expected to pay Rs 222 crore for the title rights for IPL 2020 that will be held in UAE from September 19 to November 10. The Indian unicorn replaces Chinese handset company Vivo, which opted out of sponsorship this year as India-China ties nosedived following the Galwan Valley clash in June.
It is a big move for Dream11 as it will earn almost all of its annual revenue during the month-long event, sources said.
Dream11 allows real-money gaming, creating pools based on the outcome of the match and picking specific players and teams accordingly across sports, though cricket is its largest segment.
Fantasy gaming is a seasonal business, with events like world cups and leagues providing large chunks of revenue. The coronavirus outbreak that has forced IPL 2020 to move out of India has upended sports calendar across the world.
Until a few weeks ago, investors and analysts were predicting a washout year for the billion-dollar gaming startup, after IPL was put off.
But then Vivo, which in a Rs 2,100-crore plus deal with BCCI got IPL title sponsorship rights from 2018-22, withdrew from this season and game was truly on for Dream 11.
The company is counting on a bumper IPL for business recovery.
A dream break
Founded by Harsh Jain and Bhavit Sheth in 2012, Dream11 offers games such as cricket, kabaddi and football. Its official partners include IPL, the International Cricket Council (ICC) and the National Basketball Association (NBA). China's Tencent, private equity firm Multiples and VC firm Kalaari Capital are among its investors.
CEO Jain is the son of Anand Jain, a trusted aide of Mukesh Ambani, the chairman of Reliance Industries.
In 2019, Dream11 became a unicorn—a startup valued at a billion dollars or more—when it raised $60 million in a funding round led by hedge fund Steadview Capital.
It is also one of India’s few large startups close to profits, clocking revenue of Rs 700 crore in FY19.
The fact that it is willing to pay around Rs 220 crore indicates that Dream 11 is confident of its finances at a time when it has been talking to investors for a large funding round.
Dream11 has received investor interest for over a year now for a fresh round valuing it at over $2 billion. However, it has been unable to close the round so far, as it hasn’t had earned much revenue for many months now and with a high valuation expectation, it wasn’t in urgent need of cash either.
According to media reports, it has held talks with private equity giants TPG, Advent, Kedaara Capital and Tiger Global Management among others.
With the IPL title rights in the bag and the financial boost that will come with it, Dream11 can hope to finally close the funding round.
Investors see Dream11 as one of the more stable Indian startups, given that fantasy gaming is a large segment, profitable and does not have a huge cost base.
Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd which publishes Moneycontrol.
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