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With the Indian gaming sector witnessing unprecedented growth amid pandemic lockdowns, a gaming sector fund has announced funding in the Indian gaming sector. Lumikai fund, backed by gaming and technology companies from Japan, Finland, the US, and South Korea has announced that it will invest in as many as 15-20 start-ups in the gaming ecosystem. However, the size of the fund is yet to be disclosed by the venture fund.
The new sector-focused lighthouse VC fund will look at early stage Indian startups with investment of between $200,000 to $2 million over the next five years.
Salone Sehgal, partner at Lumikai said that the fund has a distinct investment strategy to help interactive and gaming companies grow in scale. "The focus will be on early stage start-ups largely pre-seed, seed and a few at Series A with ample capacity to follow on," she said. The fund hopes to deploy much faster than the typical investment period of five years given the deep-flow in the sector. "We will do content bets which would be Intellectual Properties; we will look at platforms, tools, tech and infrastructure play which we closely relate to the gaming and the interactive market," she added.
Justin Shriram Keeling, partner, Lumikai said that gaming as a category in India has seen a sustained year-on-year growth of nearly 30 per cent. Last year the country overtook the United States to become the second largest game download market in the world with over 5 billion installs. "So that's obviously accelerated with March COVID lockdown. Just over the last quarter, India's gaming usage has increased 20-50 per cent depending on the gaming category. So from a demand perspective we obviously feel we are in the right place exactly at the right time," said Justin.
Even from a supply perspective, in the last five years, Indian gaming industry has gone from over 25 game developers to 300 or more than 10X growth. "What's also exciting within those game developers is that for the first time we are seeing some of the high end game developers' breakout globally as well," he added.
Even though India might lead in the download numbers, the monetisation for gaming companies still remains low. India does not even figure in the top 10 while countries like Canada, Italy and Spain which have users between 30-50 million generate upwards of $2.6 billion. Salone cites the example of PUBG phenomenon which has led monetisation in India. "However if we go back and trace historically, wherever we have content, which has leveraged familiar mechanics in the discrete category, those companies have been able to build profitable sustainable businesses," she added.
Lumikai also sees an opportunity in the government's recent move to ban Chinese apps and closely scan Chinese investments into India. "Now is a great time for Indian content developers and content makers to bring their content out and put it on the app store and it's a great time for innovation for India, but however challenge is also on the capital side," said Salone. While the Chinese capital was helpful for Indian companies to scale, with renewed interest from other countries such as Japan, South Korea and the US in the Indian gaming market, the opportunities to tap are aplenty.
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