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Business News/ Industry / VC fund Lumikai expects surge in gaming investments in 2024
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VC fund Lumikai expects surge in gaming investments in 2024

Lumikai, which introduced its $50 million Fund 2 last year, has already made three investments from this fund and anticipates four more deals over the course of this year

India's gaming market hit $3.1 billion in fiscal year FY23 and is projected to hit $7.5 billion in the next five years. (Photo: Bloomberg)Premium
India's gaming market hit $3.1 billion in fiscal year FY23 and is projected to hit $7.5 billion in the next five years. (Photo: Bloomberg)

Bengaluru: The gaming sector is poised to attract more investor attention in 2024, leveraging the burgeoning India consumer narrative, according to a top executive at Lumikai, a venture capital (VC) fund dedicated to gaming.

Salone Sehgal, founding general partner, Lumikai, observed an uptick in deal activity, saying that December 2023 was a particularly active month for investments, and said that Lumikai was in the process of finalizing follow-on rounds for two companies.

In one of the larger rounds in the space, live social entertainment platform Eloelo raised $22 million in funding late last year.

She pointed out India's standout growth and consumption trends amid a challenging global economic climate. “I feel that will drive a lot more investor interest, both strategic and financial," she said.

Despite a slowdown in funding in 2023, Sehgal said, the backdrop of record fundraising in 2021 and 2022 has left many funds with substantial unallocated capital. 

Lumikai, which introduced its $50 million Fund 2 last year, has already made three investments from this fund and anticipates four more deals over the course of this year, according to Sehgal.

Highlighting the resilience of India's gaming market, Sehgal noted a 20% increase in consumer spending on mobile gaming in India in 2023, contrasting with a 2% decline globally. 

"In the global markets as well, I think everybody is looking and saying we want to drive high yields in the market which will help us achieve those outcomes. And that outcome is probably India. So hence, there is a lot of foreign investor sentiment, which is good for the India market," she added.

A report by Lumikai, released in November last year, noted that India's gaming market hit $3.1 billion in fiscal year 2022-23 (FY23) and is projected to hit $7.5 billion in the next five years. 

According to the annual State of India Gaming report by the VC fund in collaboration with Google, future growth is expected to be driven by rise in in-app purchases and ad revenues in casual and mid-core games.

Sehgal also underscored the emergence of entrepreneurial talent within the gaming sector, driven by the robust development of the market in India. This has led to a surge in operators, product managers, game designers, and technical leads eager to leverage their experience for new ventures either in India or for global markets.

Reflecting on the vibrant startup ecosystem within the gaming industry, Sehgal said that Lumikai has evaluated over 1,700 companies in less than three years, far exceeding initial expectations. 

This dynamic growth underscores the gaming sector as a niche space ripe for venture capital focus, offering a plethora of opportunities for investment and innovation.

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ABOUT THE AUTHOR
Samiksha Goel
Samiksha, a seasoned journalist at Mint based in Bengaluru, specialises in covering startup ecosystems. With a keen interest in understanding the dynamics of emerging startups, she seeks out compelling narratives to share with her audience. Previously associated with The Morning Context, Samiksha delved into long-form investigative pieces focusing on consumer internet startups. Her journey in journalism began with contributions to Deccan Herald and New Indian Express, where she covered both startup ventures and the food industry. Drawing from her background in philosophy, Samiksha strives to infuse depth into her storytelling. Outside of work, she enjoys reading books and exploring the diverse cafe culture of Bengaluru. Eager for engaging discussions, Samiksha never misses an email and is always open to conversations.
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Published: 06 Feb 2024, 05:30 PM IST
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