Home PC News With first female general partner, game VC fund focuses on Indian startups

With first female general partner, game VC fund focuses on Indian startups

Lumikai unveiled its early-stage enterprise capital fund this week with a give attention to India’s fast-growing gaming and interactive markets. That’s a primary when it comes to its give attention to Indian recreation startups, however it’s also distinctive because it has a feminine basic accomplice in Salone Sehgal, a former London Ventures Partners investor.

Sehgal is a New Delhi native who grew up enjoying video games however knew only a few different feminine avid gamers. That helped her put together for this week’s announcement, however so did 15 years of working with startups and enterprise investments, she mentioned in an interview with GamesBeat. Part of her motivation is to see sturdy feminine characters embedded in Indian tradition in a online game. To make that occur in right now’s recreation enterprise, Sehgal realized that she must do one thing about it.

“I never used to find anybody who looked like me in a game world,” she mentioned. “Years later I founded a game company. I always believed that if I wanted to see an Indian female protagonist in a game, I’d probably have to build it myself. And still years later, I discovered that I probably also had to finance it myself.”

She added, “Even when I look at myself, I don’t self identify as a gamer. Even though I’ve built a game company, and I am an investor. I see that word as [representing] a 13-year-old boy sitting in his basement playing. There is this disconnect between what the word represents and who I am and my own passion and interests. To be an investor in this space, you have to have a passion for it. You need to understand the language that game developers speak and that is what sets us apart as a fund.”

The fund

Lumikai founders

Above: Lumikai founders Justin Shriram Keeling and Salone Seghal.

Image Credit: Lumikai

The enterprise fund is certainly one of dozens fashioned lately to assist the mainstream development of gaming, and the backing comes from unannounced international traders together with gaming and expertise firms from Japan, Finland, the U.S., and South Korea.

The first a part of the fund has closed however the firm isn’t but saying how a lot cash it has raised to date, Lumikai basic accomplice Justin Shriram Keeling mentioned in an interview with GamesBeat. Lumikai additionally isn’t speaking about which restricted companions are supporting it. My finest guess is that it’s concentrating on a complete fund quantity of $20 million to $40 million. But that’s only a guess. I heard from one gaming supply that they’d be skeptical about Lumikai till they disclosed the quantity, the traders, and their preliminary investments.

“Lumikai is the first 100% gaming and interactive focused VC fund in India,” Keeling mentioned. “And we think it’s fairly unique that we’re launching in the midst of a pandemic. It’s been fun, but it has been challenging to put this together over the course of a year. But with respect to the market, the timing has been great.”

Sehgal has labored at LVP, Morgan Stanley, Barclays, and recreation startups. Keeling has labored at Comcast-G4, Fox Interactive Media, Disney UTV Games. They have a mixed 40 years of expertise in startups and video games.

“My current role was a culmination of the last 15 years of being an investment banker, entrepreneur, and a VC investor,” Sehgal mentioned. “I have been very fortunate to see businesses from different vantage points, whether it was starting up a company from scratch to seeing companies from seed to VC funding, to seeing companies at the growth stage. It’s been a very interesting ride.”

Based in New Delhi, the duo mentioned that it will likely be capable of fund about 20 early-stage investments with funding sizes starting from $200,000 to $2 million. Working in stealth, Sehgal mentioned she and Shriram Keeling have met with greater than 140 founders through the first half of 2020.

Traditionally, international financiers haven’t targeted on video games, because it was thought-about a hit-driven enterprise. India particularly was seen as a small market and recreation creators have been continually underfinanced.

But that’s been altering with a brand new technology of cell avid gamers and recreation startups. The fund plans to announce its first wave of investments within the third quarter.

The first feminine recreation fund basic accomplice

Salone Sehgal of Lumikai.

Above: Salone Sehgal of Lumikai is the primary basic accomplice at a recreation enterprise fund.

Image Credit: Lumikai

Being the primary feminine recreation fund basic accomplice wasn’t Sehgal’s ambition.

“It’s a tough mantle to carry,” she mentioned. “It’s great, and it’s a bit sad that we don’t have more women at this level. It’s a reflection of the current gaming industry that is [male dominated].”

There are different distinguished feminine traders, together with Ernestine Fu of Alsop Louie and Dana Settle at Greycroft. But their funds are usually not solely targeted on video games.

“In the last one or two years we’ve definitely seen a rise in women being backed, but as you know less than 2% of entrepreneurs with financing are female and that’s even worse in the games and media industry,” Sehgal mentioned. “And to some extent, I think it has to do with the fact that there isn’t enough representation on the other side of the table, on the investor side of the table.”

She added, “It’s about what you can appreciate and what you can understand. And when there isn’t somebody on the other side of the table who looks like you, there’s this immediate disconnect, and then the barriers to investment become that much higher.”

She famous that Google’s analysis confirmed that 65% of ladies are avid gamers or informal avid gamers, however lower than 20% to 30% of video games are constructed for them.

“We have just started to scratch the surface of what entertainment for women or feminine style entertainment looks like,” she mentioned. “And that’s something that is a personal passion. A key part of our thesis is to finance games which are appealing to nontraditional audiences, whether it’s women who don’t identify themselves as gamers.”

So far, Sehgal has met a number of feminine CEOs among the many recreation startups in India. She mentioned Lumikai hopes to make use of its platform to amplify the voices of feminine entrepreneurs.

Regarding the protests and variety points raised within the recreation business within the West, Sehgal mentioned, “I feel some optimism. I know there have been voices that have been subjugated or not allowed to be heard. We are moving towards a hopefully more equal playing field. But I still think it’s a long haul. But at least there’s this discourse and recognition that there is a problem.”

India’s recreation market

Above: India is rising its avid gamers and recreation firms.

Image Credit: Newzoo

India has had some pioneering recreation firms like Dhruva Interactive, an art-focused firm that Rajesh Rao began in 1997. He bought that firm to Sweden’s Starbreeze in 2016 for $8.5 million in money and inventory. Starbreeze then bought it to Rockstar Games in 2019. Other recreation firms embody Nazara Technologies, Reliance Games, Dream11, and Nukebox Studios.

“There are definitely some early signs of local domestic Indian companies, especially ones catering to local markets that have really broken out in terms of both valuation and revenue,” Sehgal mentioned.

India has an estimated 365 million avid gamers amongst 450 million smartphone customers. It has a frictionless cell cost system. India is now the second-largest international cell recreation market with 5 billion installs in 2019, overtaking the U.S. in downloads.

“The market has transformed so rapidly that now we’re seeing these new founders who are digital natives coming on and setting up these games companies,” Sehgal mentioned. “We expect a lot more to come over the years.”

The {dollars} generated available in the market are a lot smaller, however they’re rising quick. Market researcher Newzoo estimated that India will generate $868 million in income in 2020 and proceed to develop at a 22% compound annual development price.

The common time spent in video games grew 25% within the final yr, pushed by the most affordable 4G information charges on the earth. And roughly 67% of India’s millennials are avid gamers. The hottest genres are puzzle, motion, and journey. Roughly 90% of the market is cell video games. Real-money playing and esports are additionally scorching.

Ten years in the past, India had solely about 25 recreation firms, Newzoo mentioned. Now the nation has over 300. But these studios have been starved for cash. Perhaps $300 million to $400 million has been invested in Indian recreation firms in the previous few years, and most of that got here within the final 24 months, Sehgal mentioned.

Lots of competitors

Above: India’s fashionable video games

Image Credit: Newzoo

India has lots of home and overseas recreation firms competing for followers. One worldwide recreation, PUBG Mobile, was just lately banned by the Indian authorities as a result of it was made by China’s Tencent. That’s as a result of the border conflict between India and China is producing political fallout.

Lumikai (which mixes the Latin phrase for “light” and the Japanese and Sanskrit phrases for “tribe”) has a number of competitors. They vary from the $50 million Transcend Fund based mostly in San Francisco to the just lately introduced VGames in Israel and the established London Venture Partners.

“For the longest time, it was just LVP investing in games before games investing became fashionable,” Sehgal mentioned. “And then suddenly, over the last two, three years, you’ve seen many funds mushroom up. I think that’s great because games investing is different from consumer internet investing. Games require specialist funds.”

A market area of interest

Above: Esports is rising in India.

Image Credit: Newzoo

Lumikai hopes its give attention to India will make it stand out, in addition to the truth that it has a girl as a basic accomplice. About 30% of India’s smartphone customers are feminine, they usually have little or no gaming content material focused at them, Sehgal mentioned.

“We are keeping our eye on gaming experiences for that particular audience,” Sehgal mentioned.

The founders have been firms which can be making hypercasual video games, or cell titles that take lower than a minute to play and are ad-supported. And whereas esports is scorching, it’s tougher to search out an angle for enterprise funding, Sehgal mentioned.

“In India, there are hundreds of millions of users, which are now being introduced to social chat, video, voice gaming, and all these mechanics simultaneously,” Sehgal mentioned. “We call them digital convergence natives. They are much more open to inherently social multiplayer gaming experiences. We also have a second set of founders who are more experienced product managers coming from big companies or those that are in adjacent markets.”

Game streamers have turn into fashionable in India, notably through the pandemic, as a brand new type of leisure. So Lumikai will regulate alternatives associated to streaming.

“What people often don’t really take into account is that India has this tremendously deep bench of both artistic and engineering talent, which can be drawn upon by game studios,” Sehgal mentioned. “We also believe that Indian heritage has been underplayed to the international audience, as Indian storytelling is coming of age. There’s a massive opportunity to build gaming experiences that can become transmedia.”

The agency will have a look at investments throughout the entire nation, however it’s going to focus on the outset at tech hubs in New Delhi, Bangalore, and Mumbai.

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