South Africa-based Naspers Ltd. is reportedly in talks to buy stake worth $100 million in online fantasy gaming startup Dream11 from Kalaari Capital, Think Investments and Multiples Alternate Asset Management, as divulged by two people aware of the development.
Close on the heels of staggering revenue and growth aided by the recently concluded Cricket World Cup and Indian Premier League, Dream11 is now seeking valuation to the tune of $2.5 billion, a figure that’s more than double of the $1.1 billion valuation in April, as per Livemint.
Dream11 does not need to raise a large round, but has significant inbound interest from investors. When these companies are growing fast, they prefer having a diversified set of investors and such secondary rounds give the founder the valuations they want and give early investors exit at good multiples,”
,said an investor tracking the company on condition of anonymity.
The company has been nearing profitability, and has seen value of transactions on its platform grow to a run rate of $2 billion for the last quarter, making its revenue to be about $150 million, as per an investor. Dream11 has emerged to be one of the fastest growing tech startups in India, owing to a lack of competition, a large user base and avid following of sports, especially, that of cricket.
Dream11 recently became a unicorn, with its valuation being more than a billion dollars ($1.1 billion), in April, when US-based hedge fund Steadview Capital led a $60 million round through purchase of secondary stake from early investors. The company was valued at $700 million in September 2018, post raising $100 million from Chinese internet giant Tencent.
Dream11 offers games like cricket, enabling users to win cash prizes from a reward pool.
It had about 50 million subscribers in February this year and is looking to double this figure by year-end.
Investor interest, along with the startup’s valuation has risen after a Supreme Court ruling last year saying that the Dream11 format of fantasy sports is legal and requires considerable skill and judgement, and thus is not gambling, being protected by the Constitution as a legitimate business.
Although gaming for money is a state subject and each state has separate rules, Supreme Court’s directive in favour of the company, as well as other states declaring its business as legal, have helped bolster its growth.