Games24x7 sets up Rs 400 crore fund for start-ups in interactive entertainment space

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Games24x7, one of the dominant leaders in online gaming, is establishing Games24x7 Ventures, a Rs 400 crore investment fund, to invest in early-stage start-ups in the interactive entertainment sector. Startups that can benefit from the company’s primary business areas will be the main focus of the fund.

Rahul Tewari, the company’s chief financial officer, told The Economic Times that the company would fund the new investment avenue from its own balance sheet. A unicorn, Games24x7 operates other platforms like Mycircle11 and Rummycircle and has raised $75 million early this year at a valuation of $2.5 billion.

“This is a long-term commitment over the next five years to partner with emerging companies and entrepreneurs and support them not only with capital but also bring in our operating expertise and a unique way of scaling up our operations in a very disciplined manner while maintaining unit economics, which we think is the mantra for investing in today’s times,” Tewari said.

“There is going to be a lot of disruption because of technologies such as 5G, where immersive entertainment is going to transform the experience of the customers. We think that because we understand the Indian consumer and have in-house technologies and products that the Indian consumer wants, we are very well positioned to hand-hold younger companies operationally. We have tremendous capability in marketing automation, data science, and also on the product development side,” he added.

Games24x7 is trying to diversify its business through mergers and acquisitions, in addition to investing in new technologies and products through its investment fund.

“Diversification is happening—operational diversification is underway on the platform, but this fund in itself will not deliver it because it is going to be a vehicle for making minority investments. We will benefit by getting access to new business models and learning about emerging technologies and products in the space. Diversification will not happen through this fund, that will happen through M&As,” Tewari added.

Various government agencies have now started talking about regulating the Indian online gaming industry. A report from KPMG shows that India had 43.3 crore online gamers in the financial year (FY) 2021, which is estimated to grow to 65.7 crore by FY25.

In FY21, the online gaming market generated revenues of Rs 13,600 crore, of which Rs 6,020 crore came from casual players. By FY25, this revenue is projected to reach Rs 29,000 crore, with Rs 16,900 crore coming from casual gamers.

“We are hoping for more clarity but there are a lot of progressive steps that the government is taking. There is a lot of noise but we are hoping that through deliberations with different arms of the government, we will be able to set in motion a regulatory regime that is eventually going to attract more investment and promote more entrepreneurship in the space,” Tewari concluded.