Gaming VC Lumikai Launches Fund II, Aims for $50M Corpus

Gaming-focused venture capital fund Lumikai has unveiled its second fund, Fund II, with a target corpus of $50 million.

According to the VC firm, The fund aims to invest in pre-seed to Series A firms in the gaming and media sectors. Lumikai's first fund raised $40 million in 2020, a year after its inception, and has previously backed startups like Loco, Elo Elo, and Bombay Play.

"We have already deployed 75% of the funds from Fund I, and both the funds will have a maturity horizon of ten years," said Salone Sehgal, founding general partner at Lumikai.

The firm is currently in term-sheet stage conversations with three investee firms from the second fund, which has secured commitments from limited partners (LPs) such as Krafton, Nazara, and Napster CEO Jon Vlassopulos. The Indian gaming sector has witnessed significant investment growth, with $2.8 billion raised in the last five years, according to Invest India.

"The Indian gaming industry is not just pre-revenue products and the deployment should be pragmatic… access to capital for middle-stage companies with a good model will help them scale phenomenally," said Akshat Rathee, co-founder of Nodwin Gaming and a limited partner in Lumikai's Fund II.

India's gaming sector is thriving, with an estimated 400 to 500 million gamers in the country, playing casual games, competitive games like Battlegrounds Mobile India, and real money games (RMG) like Dream 11, according to a report by  Deloitte India and Lumikai. Larger venture firms like Kalaari Capital and Matrix Partners India have shown interest in the sector.

"I think Lumikai still has an edge in gaming due to their deep sector expertise that other diversified VCs don't… Lumikai also has been much better and quicker at connecting us to larger gaming firms and gaming investors in the US and Japan when compared to diversified investors," said Ashwin Suresh, founder of Loco.

Regulatory challenges have impacted the gaming sector, with Battlegrounds Mobile India facing multiple bans and the RMG segment encountering issues with differentiation from gambling operations and state regulations. However, Lumikai has primarily focused on investments in the casual and non-RMG sectors.

"I think the regulatory environment in RMG has only started clearing up now… we are a diversified player, so we won't discount investments in RMG entirely," said Justin Shriram Keeling, founding general partner at Lumikai.

Lumikai's launch of Fund II highlights the continued growth and investment potential in India's gaming and media sectors. With its expertise and network, Lumikai aims to contribute to the expansion of the thriving gaming industry.

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