A recent report in Moneycontrol last weekend introduced a new venture capital firm which is going to be focussing almost exclusively on the Indian gaming market.
Lumikai has been founded by Justin Keeling and Salone Sehgal in order to seize the country’s growing gaming market. 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.
Salone Sehgal said that the investors and limited partners include large gaming companies and entertainment businesses from the US, Japan and South Korea without naming any of them. 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.
The gaming sector in India has been thriving under favourable conditions, however, the firms have struggled to make money despite the 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.
Salone Sehgal said,
“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”
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 – will have to look elsewhere.