Fantasy sports platform Dream11 has emerged as the title sponsor for the upcoming season of the Indian Premier League (IPL) with a bid of Rs 222 crore, in a significant loss to BCCL as the previous title sponsor was paying more than Rs 430 crores annually. The company outbid large players such as Tata Sons, Reliance Jio, Paytm and Byju’s. IPL's previous title sponsor Vivo, a Chinese smartphone brand, suspended its deal amid border tensions and the subsequent anti-China sentiment.
Interestingly, the Chinese link to IPL stays indirectly as Dream11 counts Chinese internet major Tencent Holdings as a major investor. It has also raised funds from US-based hedge fund Steadview Capital, Kalaari Capital and Multiples Equity.
Founded in 2008 by Harsh Jain and Bhavit Seth, the platform offers various games including cricket, football, basketball, baseball, among others. During a live game, users can pick players and create fantasy teams using players from both teams. These virtual fantasy teams compete against each other and users can win money from a reward pool based on the outcome of the actual game.
Dream11 runs on a freemium model where users can play certain games for free or play by putting a certain amount at stake, which is collected as the reward pool and later given out to winners.
It is also the official partner for International Cricket Council (ICC), the Indian Premier League (IPL) and the National Basketball Association (NBA).
The startup joined the unicorn club in 2019, after Steadview Capital led a $60 million round in the company which valued the platform at $1.1 billion. Prior to that, in 2018, Tencent invested $100 million.
However, Dream11 hasn’t had an easy journey. Speaking at multiple events, its founders have recounted stories of how the startup faced major rejection from investors in its early days.
In a conversation with Angel investor Miten Sampat on August 6 at an event organised by TiE Delhi-NCR, Harsh recalled how Dream11 was first founded in 2008 as a free platform, which would earn revenues through ads. He admitted that in the beginning, the company only went through with a gut feeling that everyone would love this product he was building, and didn’t think its unit economics through.
It was from 2012, he said, that the company pivoted and found the right market fit, got unit economics working and saw that users were coming to the platform, and staying on.
However, despite this, getting investors on board was a challenge for the company initially as fantasy gaming is an unregulated space and investors stayed away as they were wary of the legality of the platform. “It was on the brink of whether it was gambling. Many were not sure if it was legal or illegal, are you allowed to put money on sports and this became a challenge in getting funding,” he said.
This was until Kalaari Capital decided to invest in the company in 2014.
Over the past few years, the company has grown significantly to become the market leader in the fantasy gaming space and claims to have over 8 crore users on its platform. According to an Inc42 report, in FY19, Dream11 India had revenue of Rs 800 crore, up from INR 230 Cr in FY18, while losses double to Rs 130 crore, from Rs 65 crore in FY18.