Dream Sports raises $400 mn from TCV, D1 Capital and others; valuation jumps
- This is the first investment of Technology Crossover Ventures, a long-time backer of Netflix Inc., in India
Dream Sports, which owns online fantasy sports firm Dream 11, has raised $400 million led by Technology Crossover Ventures (TCV), D1 Capital Partners and Falcon Edge Capital. The funding has come through a secondary share sale by the firm’s early investors.
This is the first investment of TCV, a long-time backer of Netflix Inc., in India.
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With this round, which didn’t include issuance of any new share, Dream Sports’ valuation has crossed $4 billion in just six months after a $225 million, largely secondary share sale round at a $2.5 billion valuation.
“Our early investors are selling part of their holdings. It was a heavily over-subscribed round. This is a huge vote of confidence to the Indian start-up ecosystem. We have created the fantasy sports category to drive digital engagement to real-life sporting events and bring fans closer to the sport they love," said Harsh Jain, co-founder and chief executive officer, Dream Sports said in an interaction.
Jain and Bhavit Sheth founded Dream Sports in 2008.
The new round also saw participation from existing investors such as Tiger Global, ChrysCapital, TPG Growth, Steadview Capital and Footpath Ventures. Falcon Edge Capital, co-founded by Navroz Udwadia, invested via Alpha Wave.
Avendus Capital was the financial adviser to Dream Sports on the transaction.
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Jain said early investors, including China’s Tencent Holdings and Kalaari Capital, are not exiting fully. Tencent will remain a single digit percentage shareholder, he added.
“I am happy to provide great returns to them, so they can repay the LPs and create that virtuous cycle which will then allow them to raise more funds and fund the next wave of entrepreneurs and keep the tech ecosystem going."
Jain said that exits have been missing from the tech ecosystem in India.
"India is home to the world's largest and most energetic sports fan base with a dynamic mix that is unique to the subcontinent. Dream Sports is serving this community with a highly innovative product offering. We are inspired by what Harsh, Bhavit and the Dream Sports team have built, and we look forward to partnering with them," said Gopi Vaddi, general partner at TCV.
Dream11 has about 100 million users and is the first gaming startup from India to reach the unicorn status. The pandemic proved to be a big wipe-out for a few months, as fantasy sports is based on real life matches. However, with sports getting back on track, the company has been playing catch up.
Jain is also looking at growing the non-fantasy part of the business.
“It’s not just about Dream 11, but we are building a much larger vision for Dream Sports to make sports better," he said.
Dream Sports includes other brands such as FanCode, DreamSetGo and DreamX in its portfolio. FanCode is a multi-sport aggregator platform which offers a mix of content, commerce, and community engagement, Dream Pay is focusing on internal payments while the Dream Sports foundation is helping athletes train during covid time.
While Dream 11 contributes about 90% of the company’s business in terms of revenue, the other companies in the portfolio are seeing green shoots, and in the next 2-3 years should start contributing, said Jain.
There is currently a lot of regulatory uncertainty around the online fantasy sports sector, even though multiple high courts and the Supreme Court of India have recognized Fantasy Sports as a game of skill. Recently, Niti Aayog has also proposed a uniform national level guideline for the industry along with setting up a self-regulatory body.
Jain said he is happy with the government’s support to understand the sector, believing that regulation will help unlock value and help fantasy sports grow much more aggressively in the years to come.
He said that there is a distinction between e-sports and fantasy sports and these need to be bifurcated as two distinct verticals under the sports category.
“E-sports is competitive gaming that is recognized where India can win medals, whereas fantasy sports is digital sports engagement, a game of skill. Fantasy sports is based on real life sports and enhances real life sports," Jain said.
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