Our Investment in 9stacks
It is Diwali season i.e. card party invites are the norm and India is getting ready to bet. For the uninformed reader (about Diwali cards i.e. ‘ Teen Patti’ mostly), this is the festival of lights and probably the most celebrated national festival across our country’s diverse cultures, languages and festivals. During this time across the country, small and large parties are held in homes and clubs where the popular game of teen-patti (3 cards) is played until wee hours of the morning leading up to Diwali. So much for cards and Diwali as 9stacks isn’t about that. But then this speaks to Indians’ natural penchant with card, board games and betting. Who can forget the infamous game of dice in Mahabharata which set the scene for the most epic battle in India’s recorded history. And then modern India’s betting around the sport of cricket has caught a lot of attention both socially and politically.
Lets jump to 2018 as we (VC’s) invest for the next decade and beyond. I’ve known Sudhir (CEO and co-founder 9stacks) for over a decade now since he was building up and running an oil & gas exploration company in Nigeria, India. When he was leaving his cushy global CEO job in 2017 and wanted to start his own venture, I was tempted to back him and be part of his entrepreneurial journey. Unfortunately we couldn’t at the time as they raised a successful non-institutional angel round and got started anyway. That did not stop us from following the progress of 9stacks and we kept in touch during their pre-launch and product development phase. We re-initiated the dialogue in 2018 and after spending many days with the co-founding team, it was clear to us that 9stacks is the platform to back in online real money gaming. On to why we invested.
At WaterBridge Ventures, we have been hunting for online gaming plays for a while. We believe inflection points for online gaming in India are here and now. Within this, real money gaming (for ‘skill’ based games which are legal in most parts of India. Sorry Teen-patti enthusiasts as much as you believe you are skilled in winning Diwali wagers, Indian legal system doesn’t recognise it as a game of skill) is receiving blessings of regulators amongst increasing market demand tailwinds.
Of course real-money gaming in India is still in its nascent stage (INR 3000 crores / US$450M)with the 3 notable segments as Rummy (popular card matching game), Poker and Fantasy sports.
Within real money online gaming, by different estimates, poker and fantasy sports are the fastest growing segments (poker alone expected to be US$200M in size by 2021).
Then the question was why not back a rummy player or a fantasy sports player. Tencent’s $100M investment in Dream11 hasn’t gone unnoticed and there were temptations to back other fantasy sports teams, ideas. While there is overlap between fantasy sports and poker players (millennials and under 40 online enthusiasts), game of rummy has a very different and somewhat older consumer audience.
We strongly believe every successful start-up should figure out how to do one thing right and the rest can follow. This team had figured out an interesting position in online poker by attracting the right mix of pros, regular and casual gamers on its platform. Its Vegas World Series Poker event promotion had shown tactful mix of marketing, product-market fit and clinical execution. While there are other options to play real money online poker in India (Adda52, taken over by Deltin, or the newly coined JV of Pokerstars in India etc.), 9stacks had created a dent in this high growth multi-platform market.
It helped that our market research showed 7 out of 10 young card players preferred to play poker over any other game. We saw a significantly high % of poker clubs in Indian colleges and yes this is a ‘Bharat’ phenomenon, much beyond the top 10 Indian cities, educational hubs. This is mutually exclusive of the growing interest amongst pros (full time poker players) and professionals playing significant poker in home games, weekend marathons and championships in (Goa and beyond) and outside India (Vegas, Australia, China et al). We believe that a significant platform can be created in real money gaming with a starting position in online poker in India.
Since WaterBridge is a founder’s first philosophy investor, this team made a lot of sense to us. They have a significantly high opportunity cost of entrepreneurship than most teams we see in India. Sudhir (17 yrs. experience — McKinsey, SunTera), Pratik (13 yrs. experience — Zivame, Nykaa, TVF, Roposo), Abhinav (12 yrs. experience — BCG, Accenture) & Rishab (Nearbuy, 9monks), 3 of the 4 are IIT Kharagpur alums, are a perfect complementary combination of experience and passion. They want to build a long lasting business and are betting the farm on it, no pun intended! As the real money gaming space gets more commonplace in India, a professional team like this with a unique mix of Marketing, Tech and Operations experience will stand out from the rest.
Our vision is to: (a) Build the largest real money gaming platform from India, (b) Use trust infrastructure, high governance, and a customer focused platform in the real money gaming space for establishing long term differentiation.
Speaking of their progress since Nov 2017 launch, it has been impressive to see secular increase in pros, casual gamers on the platform. And more importantly, there was convincing evidence of the product-market fit as we dug into the product and engagement on the platform.
Like any start-up investment there is going to be competition for 9stacks, from some existing and some new players. But we are confident that we will give a good fight and help grow this market.
“Online real money gaming — a star is born in 9stacks”.
As quoted to media and summed up in few sentences — India is at the cusp of massive online gaming adoption with an exponential increase in players and revenue expected in this sector. Real Money Gaming will have a significant wallet share of online gaming due to ubiquitous mobile access, increasing disposable income, convenience and superior user experience.
Inputs from Pulkit Mehrotra @ WaterBridge Ventures
Press coverage: WaterBridge Ventures leads Rs 28 crores / $3.8M Series A round in 9stacks
