Exclusive: Games24x7 Is India’s 99th Unicorn, Raises $75 Mn

SUMMARY

The startup will be receiving the investment in two tranches. In the first tranche, it will be receiving investment worth $32 Mn (INR 248.8 Cr)

Games24X7 houses two popular gaming brands – RummyCircle, and My11Circle

In FY21, it posted a profit of INR 110 Cr, and earned more than INR 1,500 Cr in revenues

Gaming startup Games24x7 is raising $75 Mn in a funding round led by Malabar India Fund at $2.5 Bn valuation. Other participants in the round include its existing investor — US-based hedge fund Tiger Global.

As per the regulatory filing, the startup will be receiving the investment in two tranches. In the first tranche, it will be receiving investment worth $32 Mn (INR 248.8 Cr) and the rest will be received in the second tranche from the same clutch of investors.

As per Inc42 calculations, with this investment, the startup’s valuation has soared by 3X from $692 Mn in June last year to $2.1 Bn, thus entering the unicorn club. However, according to an Inc42 source who is aware of the deal, the round will value the startup’s valuation at around $2.5 Bn. This means, the valuation has jumped by 3.6X in nine months.

The startup is allotting a total of 4,119 Series B2 compulsory convertible preference shares to these investors for raising the funds.

The new funding round comes almost a year after it had raised $18 Mn from Frederick Emmer Pollock, Jonathan Sawyer, among others. The startup is also backed by The Raine Group.

Founded by Bhavin Pandya and Trivikraman Thampy in 2006, Games24x7 is a gaming startup which houses popular brands such as – RummyCircle, an online card game, and a sports fantasy game – My11 Circle. The third product from the startup is U Games – a hub for casual games.

Games24x7 claims that its flagship product RummyCircle has more than 30 Mn registered users, and adds 50K new users on a daily basis. Its cricket fantasy gaming product My11Circle has had total downloads of 6 Mn since inception.

Games24x7’s My11Circle competes with heavy giants such as Dream11, MPL, BalleBaazi, Nazara’s Halaplay among others. Its RummyCircle is competing against PlayRummy, JungleeRummy, Adda52Rummy among others online rummy games.

In FY21, the startup posted a total income of INR 1,573 Cr, a 19.8% rise from INR 1,312.6 Cr in FY20. It generated INR 1,556.7 Cr from its operations alone.

In FY21, it saw its expense rise to INR 1,421.7 Cr from INR 810.6 Cr in FY20. Although it still managed to remain profitable in FY21.

Between April 1, 2020 to March 31, 2021, it posted a total profit of INR 110 Cr, a drop from INR 383.7 Cr in FY20.

To give a comparison, MPL, one of the highly funded gaming unicorns posted a loss of INR 129.4 Cr in FY21 while earning INR 500 Cr.

It must be highlighted that Mumbai-based Nazara became the country’s first gaming company to go public earlier last year. Nazara owns multiple gaming brands including skill-based games such as Halaplay and WCC Rivals Clash.

With all that said, Games24x7, along with other online gaming startups involved in card or fantasy sports have been caught between the laws of various state governments demanding for a complete ban.

Just today, the Karnataka state government has approached the Supreme court challenging the state high court’s order of allowing online games.

Late last year, the Karnataka legislature passed amendments to the Karnataka Police Act, 1963 prohibiting betting and wagering in online games. After the gaming companies appealed to the state HC it struck down some contentious provisions of the law.

The Madras High Court also struck down the state government law banning online gaming last year. Another southern state, Kerala also had banned online rummy games, but the ban was lifted by the state high court now.