Tencent pours in $100 Mn in Dream11 at valuation of $500 Mn

Fantasy sports platform Dream11 has raised around $80-100 million round from Tencent Holding, said two sources close to the development.

The Mumbai-based company was in talks with the Chinese conglomerate for the investment round from past couple of months.

“The deal had materialised a couple of weeks ago and valued Dream11 a little more than $500 million,” reveal sources. Entrackr has reached out to Dream11 on Twitter for confirmation and more details on the deal. We will update the post as response comes in.

Meanwhile, Dream11 website has added Tencent as an investor along with other investors such as Kalaari Capital, Renuka Ramnath-led private equity firm Multiples Alternate Asset Management and San Francisco-based investment firm Think Investments.

Incorporated in 2007 by Harsh Jain and Bhavit Sheth, Dream11, has got early funding from the aforementioned investors.

Fantasy Sports segment is said to be a segment with a larger business potential opportunity. Dream11, with more than 2 crore users playing Fantasy Cricket, Football, Kabaddi, and NBA, claims to hold around 90 per cent of market share.

The fantasy platform allows users or fans to create their own team made up of real-life players from upcoming matches, score points based on their on-field performance and compete with other fans.

Operational since 2012, Dream11 is also the official partner of the top sports leagues in the world such as the Hero CPL, Hero ISL, and NBA.

The fantasy sports segment is said to have huge potential with the number of operators in this segment rising to 70 from 10-15 in 2017. It is expected to rise with number Internet users in the country.

In the last two years, Dream11 has grown from 2 million users to 20 million. Last year, its revenue touched Rs 62 crore, which is more than 7K percent revenue growth in comparison to 2015 figures, according to the Ken report. The losses have increased to Rs 15 crore.

For its Gambling resemblance business model, the platform was drawn to Court by Varun Gumber, who lost 50k on dream11, demanding criminal proceeding against the site.

However, Dream11 won a favorable judgment from the Punjab and Haryana High Court. The playing fantasy games required considerable skill, judgment, and discretion, and he held that such games can’t be considered gambling, said Justice Amit Rawal.

Gambling is restricted and harshly regulated industries in India. Due to its being untouched and unregulated nature, industry veterans have expressed fear of being subject of sudden clamp down.

The app is restricted on Google Play Store. In a response over Twitter, Dream11 said Google do not allow cash contests. However, the app is available on iOS.

Over the years, the good return on investment (RoI) has lured investors to put in money in sports fantasy segment. Two prime examples are Matrix Partners India and Westbridge Capital, who got 22X and 40X respectively from their investments in Ace2Three and Nazara games.

For Tencent, this is the second investment in Indian firms this year, after the Shenzhen-headquartered company led $115-million investment in music streaming service Gaana, owned by Times Internet in February.

Last year in India Tencent invested in online marketplace Flipkart and followed that up with a stake purchase in ride-hailing firm Ola. Tencent also owns stakes in messaging application Hike, healthcare startup Practo and education technology firm Byju’s.

So far, it has invested $1.3 billion in India.