Investment in gaming startups at five-year high

According to a new report by investment banking platform Maple Capital Advisors, gaming startups in India have attracted $1.6 billion in the nine months to September 30, which is more than the total value of investments in the sector over the past five years.

That said, almost 90% of the investment went to the two big players in the fantasy sports and platform gaming sector. Dream Sports and Mobile Premier League (MPL) raised $785 million and $375 million, respectively. However, before the report was published, Dream Sports announced an additional $840 million funding round on November 24, valued at $8 billion.

Dream Sports and MPL are not the only companies that have received investments.

Top venture firms such as Accel, Matrix Partners India and others have invested millions of dollars in firms including PlayShifu, Zupee and Winzo. South Korean gaming firm Crafton Inc., which makes popular battle royale games PUBG Mobile and Battlegrounds Mobile India, also invested $22 million in domestic Nodwin Gaming in March this year.

Overall, the sector has seen a total of 42 deals so far, counting both venture investments and mergers and acquisitions (M&A). Venture investment was $911 million, while M&As amounted to $611 million. This month, a separate report by gaming and interactive entertainment venture fund Lumikai Ltd said the sector saw $415 million in venture investments in 2020.

Pankaj Karn, Founder and Managing Director, Maple Capital Advisors said, “We expect investments in this segment to increase over the next 12-18 months. Consumer traction is likely to accelerate on the back of greater awareness and engagement,” he said. Platform play and electronic sports (e-sports) companies should see large capital infusions from VCs and PEs in the coming months, the report said.

According to Salon Sehgal, general partner at Lumikai, “huge amounts” are being invested in gaming globally, and India is benefiting from it. “India has been a beneficiary of the fact that capital flows into China have slowed. China has taken a tough stand against gaming.”

Sehgal said the capital investment allows companies to attract talent into the ecosystem, which helps drive innovation and entrepreneurship. “Already in the last two years, we have seen game development studios go north from 25 to 500. These game development studios are now making games from India, for India and the world. We are a new kind of leader in the gaming industry. Looking forward to seeing the entrepreneur come along with a new paradigm in terms of defining the meaning of gaming.”