Dream11 Parent Likely To Shed Tencent Ties With $300 Mn Round

SUMMARY

Dream 11’s parent entity Dream Sports is looking to raise $300 Mn from various investors, including Abu Dhabi’s Alpha Wave Incubation

With this, Dream Sports is most likely to give exit to its early investors, particularly China’s Tencent Holdings, Kalaari among others

In FY19, the company’s revenue stood at INR 801.7 Cr, a 251.9% increase compared to the previous year

Mumbai-based sports tech startup Dream Sports, the parent company of online fantasy sports platform Dream11 is planning to raise a fresh fund of $300 Mn from Abu Dhabi’s Alpha Wave Incubation managed by Falcon Edge.

Accordingly, the company is looking to raise funding from secondary sale of shares owned by early investors, at a valuation of $4 Bn. If the funding goes through, the company is most likely to double its valuation in around six months, as reported by Economic Times, quoting an unidentified source.

Further, the sources said that existing investors including China’s Tencent Holdings, Kalaari Capital and Multiples Alternate Asset Management among other investors are looking to sell their shares. “The deal may involve some primary cash infusion but the final contours are still being worked out,” said a person quoted in the report.

Started by Bhavit Sheth and Harsh Jain in 2008, Dream Sports over the years have ventured into providing multiple fan engagement avenues, including fantasy sports, content, commerce, experiences and events among others. Some of its portfolio companies include fantasy sports platform Dream 11, gaming content streaming platform FanCode, gaming events platform DreamSetGo and sports accelerator DreamX. Its fantasy sports platform Dream 11 claims to have 80+ Mn users.

In FY19, Dream Sports’ revenue stood at INR 801.7 Cr, compared to INR 227.8 Cr in FY18, which is a 251.9% increase. However, its losses widened to INR 131 Cr from INR 65 Cr. Also, the company still has a long way to go in terms of achieving profitability as it is spending heavily on advertising, including IPL, England-India cricket series sponsorship.

Last year, in September 2020, Dream Sports raised $225 Mn from New York-based investment firm Tiger Global Management, an investment wing of global private investment firm TPG Global, India-focussed private equity firm ChrysCapital and investment firm Footpath Ventures. With this funding, China’s Tencent Holdings’ shares in the company came down to below 10%.

Prior to this, in 2019, the company had raised $100 Mn from Tencent Holdings in Series D funding. At the time, its valuation spiked to around $2.5 Bn. In April 2019, the company became India’s first gaming unicorn after it raised over $60 Mn from Steadview Capital.

Meanwhile, Mobile Premier League (MPL) is inching closer towards the unicorn club, where it has reportedly raised $100 Mn fresh funding, at a valuation of $800 Mn. A week before that MPL had announced a $500K fundraise as part of its Employee Investment Plan.