Dream11 eyes $500 million from Tiger-led fundraising round

New York-based Tiger Global Management, one of the most active startup investors in India, is likely to lead a $500 million funding round in fantasy gaming platform Dream11, three people aware of the matter said.

Tiger could spend as much as $200 million to buy new shares as well as shares from Dream11’s early investors Kalaari Capital, Think Investment and private equity firm Multiples at a valuation of $2.5 billion, the people cited above said on condition of anonymity. With this investment, Dream11 will be worth more than double its $1.1 billion valuation in April 2019. The company is working with investment bank Credit Suisse for the fundraising.

While Dream11 and Tiger declined to comment, Credit Suisse did not respond to an email seeking comment.

“A lot of investors have been interested in Dream11. They have built a large profitable business with almost no big competitor and still a lot of avenues for growth remaining," said an investor tracking the space, one of the three mentioned above requesting anonymity said.

Founded by Harsh Jain and Bhavit Sheth in 2012, Dream11 offers games such as cricket, kabaddi and football, where users can win money from a reward pool, depending on the players they pick and the actual outcome of the game. Its official partners include the International Cricket Council (ICC), the Indian Premier League (IPL) and the National Basketball Association (NBA).

Dream11 also aims to build out its platform as a full-fledged sports platform selling merchandise. It has emerged as one of the fastest growing tech startups in India, driven by a lack of competition in the space, a large user base and avid following of sports, especially cricket.

Mint first reported on 15 August that South African media conglomerate Naspers is in talks to invest in Dream11. The Times of India reported on 30 August that Japan’s SoftBank, Naspers and Tiger are among investors in talks to invest in Dream11.

However, Naspers backed out after showing preliminary interest, while other investors are still interested, Tiger is the frontrunner to close a deal, and is evaluating the company very closely, said the people cited above.

If Tiger does invest, it would mark the firm’s second late-stage bet in India in recent times. Earlier this month, Tiger led a $200-million round in online education firm Byju’s, valuing it at $8 billion.

While Tiger has earlier invested in the late stages of portfolio companies such as Flipkart, these have been cases where it was already an early investor. In Byju’s case, as well as Dream11, Tiger is writing its first cheque at a mature stage for the company.

Dream11 became a unicorn, valued at over a billion dollars ($1.1 billion), in April, when US-based hedge fund Steadview Capital led a $60 million round by purchasing secondary stakes from early investors. The company was valued at $700 million in September 2018, when it raised $100 million from Chinese internet giant Tencent.

Dream11 had about 50 million subscribers in February last year, which is said to have doubled by the end of the year, the people cited above said.

Investor interest as well the company’s value have surged after the Supreme Court in an order last year said that the Dream11 format of fantasy sports is legal and one that requires considerable skill and judgement, and thus is not gambling and is protected by the Constitution as a legitimate business.

Although gaming for money is a state subject and each state has separate rules, the Supreme Court’s directive in favour of the company, as well as other states which have declared its business as legal, have helped it grow at a rapid pace.