This Indian sports tech startup lost millions – then made it big.

It was a loss of millions of dollars at the age of 24. A defining moment for entrepreneurs Harsh Jain and Bhavit Sheth.

Jane felt “terrible.” “There is no other way to put it.”

“Every founder, when they start something, you really believe that this is going to blow up, that you’re going to change the world… and ours crashed and burned.

But the two from India know all about bouncing back.

Over 10 years since his company’s launch, DreamSport has been valued at $8 billion and has launched 160 million users.

Dream Sports is an Indian sports technology company that owns Dream11, the largest virtual gaming platform in the country.

Fantasy sports are online games where participants can create a proxy team that follows real sports players. Game participants earn points and receive cash prizes based on the performance of these players in the real world.

“Every sports fan has an opinion on how a sport should be played or which player should be selected, whether the strategy of that game is correct or not,” Sheth said.

“What fantasy sports tries to do is bring that feedback into a more structured format.”

“I keep comparing fantasy sports to your movie popcorn,” Jain added. You have popcorn because it makes your movie better. Fantasy sports do this for sports. It enhances your participation and makes that sporting event 100 times more fun.

The two men, now 36, told CNBC Make It how they pioneered the multibillion-dollar industry in India — and how they turned their dream into reality.

Jane was first introduced to fantasy sports in 2001 while studying in the UK, specifically the Fantasy Premier League.

“I found out about fantasy football… and I got all my friends back home. It was one,” he said.

Jane

He decided to take matters into his own hands.

“I told my friends that we have to solve this problem… There are a billion Indian cricket fans and they don’t have fantasy cricket.”

Jain partnered with his childhood friend Sheth to launch Dream11 in 2008 – offering free-to-play fantasy cricket based on ads for revenue.

It also allowed players to create a virtual team for a season.

They received “a couple of million dollars” from family and friends as starting capital, but two years later, they ran out of cash.

“The ad revenue isn’t coming in because… product[s] He didn’t understand fantasy sports in India. They had to learn,” said Sheth, the company’s chief operating officer.

“At that time, we were thinking, what should we do now? We knew that fantasy sports should work as a model… There has to be some format that works in India, we just didn’t know what it was.”

Jain and Sheth decide to start a digital agency called Red Digital, where they can “make money”.

“That was a challenging time to find something to help us get through the financial crisis,” Sheth said.

According to him, Red Digital has since become one of the largest digital agencies in India – which in turn has helped boost Dream11’s growth.

In the process, the co-founders decided to shift the virtual gaming platform from relying on ads to advertising. “Freemium” model.

“On the monetization side, we’ve done in-built contests where you have to pay to enter … and we’ve built in a prize pool,” Sheth explained.

“If you win, you get prize money. Naturally, every time someone joins the contest, we keep a certain percentage of the entry fee that the user pays.”

The average ticket price for DreamSport is 40 rupees, or half a dollar, and the highest player can earn up to $250,000.

They also changed the Dream11 from a season to a single match format, which helped reduce the commitment level of users from several months to one day, Sheth said.

Jain added, “That’s how we’ve measured it so far. We don’t have any advertising on the Dream11, we haven’t had … since we moved to this model.”

That strategy paid off.

In the year In 2013, when Dream11 began to see strong retention, Jain and Sheth decided to sell their digital agency Red Digital to focus on building Dream11 instead.

“If we had to double down on one business, which one would we choose? We both enjoy building products — we’re product people and we don’t like doing the service business as much,” Sheth said.

“It was more than necessary.”

The digital agency was sold for $800,000, which brought the couple back into the virtual sports arena.

Over the next seven years, Jane and Sheth began to see the fruits of their labor.

In the year In 2019, the Mumbai-based startup finally joined India’s unicorn club – the first sports tech company to do so.

According to news tracking site Intracar, DreamSport is now one of the rare unicorns in India that is profitable. In fact, Jain and Sheth say their company has been in the green since 2020.

“Most entrepreneurs forget that funding can’t be taken for granted. The funding we’ve had so far has given us 12 to 18 months of runway and then breakeven and profitability.”

“If your unit economics don’t lead to that, your assumptions are wrong, or the amount of money you’re raising is wrong, your business fundamentals are wrong.”

It’s something they learned from losing a lot of money early on in their company, Jain added.

“Unfortunately, this is a very hard lesson to learn, one that many founders have to learn – money is not free.”

This razor sharp vision has fueled the growth of the dream sport. Dream Sports investors include Chinese tech giant Tencent as well as US hedge funds Tiger Global and D1 Capital.

In the year By 2021, DreamSport has raised $840 million, valuing the company at $8 billion. In the same year, the company reported revenue of $332 million and a net profit of more than $40 million.

Jain and Sheth have come a long way.

Looking back, they say it was “perseverance” that got them through the twists and turns.

“He was seeing a problem … and being passionate about it. I think that’s what most founders want,” Jain said.

“Perhaps you’ll learn the rest along the way,” Sheth exclaimed.

Dream11 offers a total of 11 fantasy sports including cricket, basketball, football and baseball.