The parent company of the fantasy sports website Dream11, Dream Sports, has chosen to stop operating Dream Capital, its venture capital and mergers and acquisitions division. After the government decided to tax online real money games with a 28% goods and services tax (GST), this action was taken.
Dev Bajaj, the head of Dream Capital, is also quitting the company, as noted in The Economic Times, which broke the news first. According to media reports, the decision to terminate Dream Capital’s services was made two to three months ago.
In August 2021, Dream Capital was established with a $250 million fund to target companies in the sports, online gaming, and fitness technology sectors. The company previously conducted multi-stage investment methods with ticket quantities ranging from $1 million to $100 million.
Rario, the largest investment made by Dream Capital, garnered media attention by raising $120 million in its Series A round. However, the startup underperformed and let go of several staff members. The co-founders of Rario have already quit.
Fittr, IMBR, Elevar, KheloMore, and Marketwolf are just a few of the more than 10 firms that the investment company has backed.
With Rs 3,841 crore in operating revenue, or 42.2% of the total industry revenues, as of the fiscal year 2021–2022 (FY22), Dream11 was India’s top revenue–generating fantasy sports company.
The tax officials sent a show cause notice to Dream11 last month about an alleged Rs 25,000 in GST cheating. In order to contest the notice, Dream11’s parent did file a writ petition with the Bombay High Court.
Since the implementation of 28% GST for real money games, a number of gaming firms have had to lay off over 500 staff, including MPL, Spartan Poker, and Hike Rush Gaming Universe, while Quizzy, Fantok, and One World Nation had to suspend operations.
While a pause in operations at Dream Capital is expected, it is also true that the company’s conception was facilitated by simple cash availability. So much so that it practically became a matter of coming up with excuses to seek further funds. That almost never has a good outcome. Few businesses appear to have made plans for the potential effects of taxation and policy on the gambling industry, despite the fact that these risks have always existed and are currently known to exist. That doesn’t show the amount of maturity that managing millions of dollars in funding should. Dream11 aspired to distinguish itself by not just being the biggest participant but also by essentially putting all of its financial resources into the game industry.
