After bagging sponsorship rights for IPL 2020, Dream11 off to a dream jump in valuation

Dream11 founder Harsh Jain (File image)

Dream11 may be in the business of fantasy sports, but there’s nothing imaginary about this unicorn’s valuations. The fantasy gaming platform, which has bagged the sponsorship rights for the 13th edition of the Indian Premier League (IPL) for Rs 222 crore, is likely to announce a fresh round of funding of $235 million.

ChrysCapital, TPG, Tiger Global and Footpath Ventures are among the marquee investors expected to participate in the fund-raise valuing the company at $2.5 billion, more than twice the valuation it commanded a year ago.

The bulk of the transaction, of $200 million, will comprise the sale of shares in the secondary market ensuring the promoter’s stake will not be diluted significantly. The remaining $35 million will be a primary issuance and the money will be used to fund the IPL sponsorship.

FE has learned that following the fund-raise, Chinese giant Tencent’s stake in Dream11 will fall from 10.9% to below 9.9%. ChrysCapital manages $4 billion of assets while Footpath Ventures is a New York registered investment fund.

Founded by Bhavit Sheth and Harsh Jain, son of Anand Jain, chairman of Jai Corp, Dream 11 reported revenues of Rs 800 crore in 2018-19, up sharply from the Rs 230 crore in 2017-18.

Jain will remain the single largest shareholder in the company, post the fund-raise.

The company entered the unicorn club with a valuation of over $one billion in April 2019, with a $60-million investment from Steadview Capital, Asia-focused alternative manager. Early investors include Kalaari Capital, Multiples and San Francisco-based Think Investments.

Dream11 is the official gaming partner for the IPL and has 70 million active users on its platform. Typically, the cost of acquiring a user for fantasy gaming platforms is anywhere between Rs 150-200 per user, but for paid users this amount can be as high as Rs 700 per user claim experts.

Dream11’s ambitions include a global footprint. In February this year, it partnered with the European Cricket Network (ECN) to become the ‘Official Fantasy Game’ for the European Cricket Series (ECS) and European Cricket League (ECL) tournaments. It has also signed on international sports stars for marketing campaigns.

The company’s journey to the unicorn club has not been a smooth ride. In 2017, a public interest litigation was filed against it in the Bombay High Court by Advocate Gurdeep Singh Sachar. Three special leave petitions were filed with the Supreme Court challenging the Bombay High Court decision. Both courts threw out the appeals granting the company and its operations legality, classifying real money fantasy sports as a game of skill and not a game of chance.

Globally, gaming is a $155-billion industry and expected to reach $257 billion by 2025. The fantasy sports market is slated to touch nearly $10 billion by 2024 globally. In India, Dream11 is the largest fantasy gaming company with a lion’s share of the market in terms of users. The Boston-based DraftKings is the largest sports fantasy company in the US and has 21 investors. FlowPlay is another top rated sports rated company. Smarkets is a prediction market website, which was founded in 2008 and is based out of London and is backed by a set of private investors.