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Tiger Global-backed fantasy gaming unicorn Dream11 starts churning profits

Written by Moulishree Srivastava Published on     3 mins read

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The Mumbai-based firm made a profit of USD 24.4 million in the financial year ended March 31, 2020—a big jump from the USD 11.7 million loss it made a year earlier.

Tiger Global-backed fantasy gaming unicorn Dream11 has become one of the very few consumer internet startups and one of the first gaming platforms in the country to turn profitable.

The Mumbai-based firm made a profit of USD 24.4 million (INR 1.8 billion) in the financial year ended March 31, 2020, a big jump from the USD 11.7 million (INR 870 million) loss it saw a year earlier. Its revenues grew over 2.5x to INR 20.70 billion (USD 280 million) in FY 20 from INR 7.75 billion (USD 105 million) in FY 19, as per the latest regulatory documents.

Dream11 offers online fantasy games across cricket, kabaddi, NBA, hockey, and football. It is run by Dream Sports, which also operates sports streaming platform Fancode, sports experience platform DreamSetGo, payment platform DreamPay, sports accelerator DreamX, and corporate venture capital fund Dream Capital.

The company said it saw rapid growth partly because it adopted innovative marketing strategies and launched new products. It spent INR 13.28 billion (USD 180 million) or over 70% of its total expenses—which stood at INR 18.67 billion (USD 252.8 million) for FY 20—on advertising and promotions.

Dream11 has joined a still small list of local consumer internet startups—including beauty and personal care products retailer Nykaa and omnichannel eyewear firm Lenskart—that have started churning out profits. This is in line with investors’ expectations, who, beginning in 2019, had begun pushing their portfolios toward better unit economics and a path to profitability rather than burning cash to chase growth.

Notably, Dream Sports numbers are for the period prior to the COVID-19 crisis, which hit India in March 2020. Since then, the fantasy gaming platform has seen massive growth. By the end of last year, the company had crossed the 100 million registered user mark.

In September 2020, Dream11 raised USD 225 million, which was followed by a USD 400-million secondary funding round in March 2021 that valued it at around USD 5 billion. Last month, the company set up Dream Capital with a corpus of USD 250 million to invest in startups across sports, gaming, and fitness. The move is aimed at diversifying the company’s operations beyond fantasy games.

“While organic growth continues, we don’t want to fall into that age-old trap of trying to do everything ourselves,” said Harsh Jain, co-founder and CEO of Dream Sports, in an interview this year. He added that the idea behind the fund is “to build an overall sports technology ecosystem and back a whole host of startups through this initiative.”

Reportedly, the company is likely to witness another funding round, which could push its valuation up to USD 8.5 billion. It is also rumored to be working with American investment banks to list its shares in the US early next year.

Founded in 2008, Dream11 was the first Indian gaming startup to become a unicorn in 2019. It competes with MyTeam11, My11 Circle, Fancy11, Faboom, CricPlay, Fanmojo, and 11Wickets, among others.

While the Supreme Court in August 2021 maintained that Dream11’s fantasy sports involve skill and cannot be considered gambling, a new bill passed by the southern state of Karnataka on Tuesday bans online “games of chance.” Given that the local government is also targeting game operators offering skill games that involve the risk of players losing money, Dream11 might be roped into the controversy and face challenges in the state.

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