Amid Taxation Row, Dream11 To Shut Down Corporate Venture Capital Arm

Dream Sports, the parent company of the gaming unicorn Dream11 has decided to shut down its corporate venture capital (CVC) arm, Dream Capital, as it adapts to a post-28% GST world.

For now, Dream Capital has been rolled back into Dream Sports, the parent entity, according to an ET report. The report also calimed that the CVC arm’s top boss, Dev Bajaj, is also leaving the organisation. Bajaj was also Dream11’s chief strategy officer.

The gaming giant will now explore strategic opportunities via an in-house corporate development structure, the report said.

Dream Capital was launched in August 2021, when Dream11 said it would deploy $250 Mn from its balance sheet to fund investments across the startup ecosystem. Dream Capital was formed to back startups in online gaming and allied sectors.

Led by Bajaj, a former partner at venture capital firm Kalaari Capital, the fund made one of its largest investments, $50 Mn, in the content and commerce platform FanCode, followed by smaller bets on startups such as Fittr, an online fitness marketplace.

But with the ongoing funding slowdown and tax issues, there has been a rethink, a person familiar with the situation at Dream Sports told ET on the condition of anonymity.

Given the realities of the gaming sector now, the unicorn will scout for companies that will widen its offerings, placing more strategic bets going forward.

Following its diversification strategy, Dream11 said last week that it acquired Sixer, a platform that deals in fantasy cricket stocks.

The decision by Dream Sports to abandon its venture investing ambitions is also closely tied to the failure of its most high-profile bet, Rario, made during the peak of the Web3 bull-run worldwide. Dream Capital had led the $120 Mn funding round Rario raised in April 2022.

The development comes as Dream11 is among the worst-impacted startups in the aftermath of the government implementing a 28% GST on online gaming. According to several media reports, the unicorn has received a pre show-cause notice worth INR 25,000 Cr from the Directorate General of GST Intelligence (DGGI), making it one of the most significant cases of indirect taxation.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.