Dream11 to Close Down Corporate Venture Capital Arm Amidst New Tax Regulations

• ByStartupStory     |    October 14, 2023

Dream Capital, the corporate venture capital (VC) arm of Dream Sports Pvt. Ltd., is reportedly winding down its operations. This decision comes in response to recent changes in India’s tax regulations, particularly the imposition of a 28% Goods and Services Tax (GST) on online Real Money Gaming (RMG) companies, effective from October 1.

The tax measures are predicted to significantly affect Dream Sports’ profits, potentially causing an 80% decrease. Furthermore, a 40% drop in revenue is expected during the upcoming financial results, as GST and other cost implications may deter many users from using Dream11, the fantasy sports platform.

To mitigate the impact on revenue and user retention, Dream11 has devised a strategy to alleviate the GST burden on its users. They are offering cash bonuses to users equivalent to their GST dues. This move aims to keep users engaged during the ongoing ODI World Cup 2023.

Dream Capital was established a few years ago with CEO and Co-founder Harsh Jain announcing that the fund would focus on investing in technology-based gaming startups.

According to reports by The Economic Times, it appears that Dream Sports will no longer be able to sustain the VC arm. The company will now shift its focus toward collaborating with low-risk startups and expanding its range of offerings. Dev Bajaj, the figure behind Dream Capital, is also departing from the company.

The winding down of Dream Capital is part of a series of changes within the Dream Sports ecosystem. Rario, an NFT trading platform backed by Dream Sports, is also undergoing significant modifications in its leadership. Co-founders Ankit Wadhwa (CEO) and Sunny Bhanot (CTO) are stepping down from their roles. This shift will see more involvement from investors such as Sachin Tendulkar and Alpha Wave Global in Rario’s management.

Rario has been dealing with various challenges, including a Delhi High Court ruling in favor of Striker against Rario’s claim of exclusive rights to NFT titles. The startup is also under scrutiny for potential cryptocurrency-related tax violations.

The developments indicate that Dream Sports, which appeared to have a wide-ranging influence in the industry just a few months ago, is facing challenges as the impact of the 28% GST takes its toll. While Dream11 has actively encouraged users to prepare their fantasy sports teams, the company itself was not adequately prepared for the recent tax changes introduced by the GST council.

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