In an exciting development, Lumikai unveiled its second investment fund, Fund II, with a resounding mission to benefit the gaming landscape and empower innovative entrepreneurs. With a targeted corpus of $50 million, this fund seeks to support promising gaming and interactive media ventures in India, spanning the entire spectrum from pre-seed to Series A investments.
What sets Lumikai apart is its inclusive approach, inviting not only global investors but also domestic rupee capital. With the establishment of a dedicated $10 million alternative investment fund for Indian limited partners, Lumikai is fostering homegrown talent and creating a robust ecosystem. These initiatives mark a significant milestone, as Lumikai’s total investment in India’s gaming and interactive media industry will now exceed an impressive $100 million, including the previous Fund I, which successfully managed $40 million.
Under the visionary leadership of Salone Sehgal, Founding GP of Lumikai, Fund II aspires to identify and invest in 18-20 category-leading opportunities. The fund will strategically focus on five key areas: gaming content and digital media, UGC platforms and the creator economy, tools, technology, and infrastructure, companies leveraging applied game mechanics and interactive touchpoints, as well as groundbreaking innovations like mixed reality, generative AI, virtual identities, and edge computing. “Our intention is to be able to build a portfolio of assets across these sectors. It could be Indian companies building for the world or India,” emphasized Sehgal. While Fund II includes a small allocation for emerging markets like the Middle East, its primary strategy remains centered around investments in India, harnessing the nation’s immense gaming potential.
Lumikai’s unwavering commitment to fueling the industry’s growth is evident in its robust pipeline of planned investments. With three deals at the term sheet stage, Lumikai is poised to collaborate with industry veterans leading companies focused on content, platforms, and frontier areas. This strategic vision positions Lumikai as a catalyst for innovation and progress within the gaming and interactive media landscape.
Lumikai finds exciting trends emerging in India
Looking at the exciting trends in India, Justin Shriram Keeling, Founding GP of Lumikai, expressed enthusiasm for the gaming market’s prospects. Lumikai’s latest report highlights the rapid growth of in-app purchases, mid-core, and hardcore gaming categories, outpacing all others.
“We are very bullish on the concept of the next generation of casual and mid-core games that are building in-app purchases natively to their economies,” Keeling affirmed. Notably, India stands as the fastest-growing games market globally, with an astonishing growth rate ranging from 27% to 35% depending on the category. The Indian gaming market achieved a remarkable revenue of approximately $2.6 billion last year and is projected to sustain its upward trajectory, reaching an estimated $8.6 billion over the next 4-5 years.
Keeling emphasized India’s exceptional position as the leading market for game downloads, surpassing the combined size of China and the US. Moreover, there has been a significant surge in monetization within the country. Just a few years ago, the average revenue per user (ARPU) ranged from $2-$3, but in the past year alone, it skyrocketed to $20. While the future ARPU target of $200 remains uncertain within the designated time frame, Lumikai anticipates continued growth over the next four to five years.
Salone Sehgal underlined the importance of prioritizing monetization from the outset for gaming companies. By constructing a strong monetization strategy, these companies can generate quick revenue and reduce their reliance on extensive capital. This approach, which Lumikai successfully employed in Fund I by identifying companies with the potential to build thriving businesses, will continue to guide their investment decisions in Fund II. Lumikai has already backed a range of gaming and interactive media startups, including Loco, Bombay Play, Elo Elo, Studio Sirah, Buystars, House of X, Gigafun Studios, and several others, using its $40 million Fund I launched in 2020 as a springboard for success.
Salone Sehgal reflected on Lumikai’s journey, stating, “Since the beginning, our ambition was to unlock a new asset class for investors by turbo-charging India’s most ambitious founders within the ecosystem. Over the course of the last three years, we have witnessed 1,400+ deals and seen the industry attract investor interest, deepen founder quality, and achieve liquidity events.” With unwavering confidence in the long-term potential of the Indian interactive market, Lumikai seizes this opportunity to build upon the foundation they have laid, propelling the gaming and interactive media industry to new heights.
The star-studded investor lineup for Lumikai’s Fund II reflects the fund’s strong global presence and credibility. Japanese gaming giants Mixi and Colopl, South Korean conglomerates Krafton and Smilegate, Finland’s decacorn Supercell, and strategic Indian players like Nazara have all joined forces to support this industry-transforming initiative. Furthermore, select prominent Indian family offices, including the Jeejeebhoys, KCT Group, DSP Kothari, and Sattva Group, have recognized the immense potential and invested in the fund. The fundraise also witnessed the enthusiastic participation of high-net-worth individuals (HNIs) such as Ben Feder, former CEO of Take Two Interactive, Jon Vlassopulos, CEO of Napster, Pankaj Gupta, founder of Gulf Islamic Investments, and Akshat Rathee, founder of Nodwin Gaming.
