New Venture Capital Fund to Focus Almost Exclusively on Indian Gaming Start-ups
A report in Moneycontrol this weekend introduced a new venture capital firm which is set to focus almost exclusively on the Indian gaming market.
Called Lumikai, it has been founded by Justin Keeling and Salone Sehgal, with a mandate to seize the initiative in the country's growing gaming space. The partners have stated they wish to back 15-20 start-ups within the next couple of years. New digital media and animation are other areas the fund will focus on.
"Since the 4G explosion media and entertainment have been category leaders in terms of growth and within that gaming and what we call as interactive gaming is the fastest-growing sector. Both have been sustaining 35-40 per cent year-on-year growth. That has obviously been accelerated by the COVID lockdown. Today in India, game studios are breaking out on a global scale", Keeling told Moneycontrol.
Sehgal said the fund investors or limited partners include large gaming and entertainment companies from the US, Japan, and South Korea, although no names were revealed. Lumikai's first investments in start-ups will range from $200,000 to $2 million in seed and Series A rounds, with money also reserved for later rounds.
Lumikai isn't the only fund interested in online and mobile gaming. Others like Sequoia, Lightspeed, Accel, Matrix and Kalaari are all involved in this sector in some way.
While gaming continues to thrive in India with conditions favourable, firms have struggled to make money, despite huge numbers of users. Lower disposable incomes outside major cities and an advertisement market dominated by Google and Facebook are just two reasons for this.
But Seghal sees things changing: "I believe that in the last 18 to 24 months, things have changed. When we speak to our global strategic network who all have titles in the top-grossing charts in India, they are seeing an increase of 30-50 per cent of revenues and 50 per cent growth in paying users.
"It is on a smaller scale but it is still showing an upward trajectory, based on monetisation. Now, this is not to say that we are already there yet but if you look at the current app store and the composition of top grossing charts, representation of Indian content in these charts is still very low, and is a big opportunity", Sehgal added.
The recent ban on some Chinese apps could be both a gift and a curse for investment in the industry. On the one hand, Indian companies could benefit from the ban, but Chinese investors like Tencent - traditionally major players in the Indian market - could look elsewhere.
