Salone Sehgal: Empowering Women Gamers and Navigating the Gaming Investment Landscape

When Salone Sehgal entered the world of gaming investments, she faced skepticism, biases, and a tide of rejections. However, she stood her ground with unwavering determination, proving that the gaming industry was not just a “big boys’ world.” With a passion for supporting women gamers and a track record that spanned M&A banking and private equity, Sehgal embarked on her entrepreneurial journey as the founder of TrulySocial, a mobile gaming company. Her mission was to create immersive, narrative-based social games for a global female audience. It wasn’t long before she realized that the world of venture capital could be as challenging as building games.

Challenging the Status Quo:

During her early meetings with venture capitalists (VCs), Sehgal faced baffling questions and stereotypes. VCs questioned her presence in the gaming sector, and some suggested that she didn’t belong there. However, Sehgal was quick to challenge these notions. She reminded them that around 60 percent of casual gamers worldwide are women, yet less than 20 percent of games and companies cater to them. Sehgal saw an opportunity in building games for women, despite being in the minority as a female entrepreneur in the field. Her tenacity and vision were evident, but not everyone shared her perspective.

Despite her impressive background, including roles at Barclays, Morgan Stanley, and KPMG, where she executed over $10 billion worth of M&A transactions, Sehgal faced resistance when seeking VC funding for TrulySocial. One VC’s attempt to validate her idea by having his wife try the product left Sehgal indignant. She challenged the double standard, stating that gender should not determine the credibility of a business idea. Overcoming a series of rejections, Sehgal eventually secured backing from prominent investors like Nazara Games and London Venture Partners. However, despite her formidable reputation and her experience in building TrulySocial over three and a half years, she was forced to shut it down after a buyout deal fell through.

Undeterred by challenges, Sehgal transitioned from being a founder to becoming an early-stage investor. She joined London Venture Partners (LVP), an early-stage fund focused on interactive gaming and entertainment segments. Even as an investor, she continued to face comments questioning her position and competence. Critics often labeled her as a diversity hire. However, Sehgal had developed thick skin over the years and knew how to block out external noise. After almost two years, she returned to India in 2019 with a vision of starting a VC fund dedicated exclusively to the gaming industry.

Sehgal’s return to India coincided with a burgeoning gaming landscape. The rapid growth of smartphones and affordable data plans had set the stage for a gaming boom in the country. In 2018, there were approximately 250 million gamers in India, and by FY19, the gaming market represented a billion-dollar opportunity, according to Redseer. In FY20, this opportunity grew to $1.8 billion, and the gaming industry continued to thrive even during the pandemic. India’s appetite for gaming was on full display with a remarkable increase in game downloads. Users in India downloaded games 15 billion times in 2021, with an impressive seven billion new game downloads during the first six months of 2022. Gaming accounted for a third of all app downloads in India, exceeding any other category. Indians spent an average of 40 minutes daily playing casual games, with a 30 percent increase in gaming time post-Covid compared to pre-Covid. The number of gamers in India reached 450 million in 2021, with an expected increase to 600 million in 2022.

Lumikai: A Fresh Approach to Gaming Investment

Despite the promising gaming landscape, Sehgal recognized the challenges of competing with well-funded players in real money gaming (RMG). Major fantasy sports platforms like Dream11, MPL, and Games 24X7 dominated the Indian gaming market and had substantial financial backing. As a latecomer with an average ticket size between $200,000 and $2 million, Lumikai faced stiff competition. Sehgal and her co-founder, Justin Keeling, decided to take a unique approach. Rather than attempting to enter the overcrowded fantasy gaming market, Lumikai sought to diversify by building a portfolio of gaming assets. The fund focused on content, platforms, tools, tech, and infrastructure, acknowledging that the breadth of the gaming sector extended beyond fantasy gaming.

Fast forward to October 2022, and Lumikai has successfully nurtured over half a dozen distinctive investments in the gaming industry. One of its standout investments is Loco, a mobile-first live game streaming platform. Loco boasts over 52 million users and a substantial increase in daily active users, monthly active users, and monthly active streamers. It secured $51 million in funding from Lumikai and other prominent investors. Cloudfeather Games, another Lumikai portfolio company, offers plug-and-play real money gaming solutions for developers and raised $1.25 million in a pre-seed round. Studio Sirah, a game development studio focusing on cross-platform, midcore games with Indian themes, introduced its first game, Kurukshetra: Ascension, featuring characters from epics like the Ramayana and Mahabharata.

One of the most intriguing bets is Supernova, a startup that creates live quizzes and interactive gamified formats focused on CBSE math topics for children aged four to 12. Supernova secured $1.1 million in pre-seed funding led by Lumikai and backed by investors like Kae Capital and Goodwater Capital. The startup aims to revolutionize children’s education through experiential, game-based learning.

The gaming industry presents numerous opportunities for growth and monetization. Approximately 20 percent of India’s 400 million active gamers opt to pay for games, with RMG users spending significantly more. Despite the predominance of real money gaming, in-app purchases contributed significantly to gaming industry revenues in FY21. While the gaming sector in India is still in its infancy, early-stage investors like Lumikai recognize the potential and are prepared for a patient and long-term investment approach. Lumikai understands that exit options for VCs predominantly occur through strategic acquisitions, rather than IPOs, and is prepared for a more extended investment horizon. Additionally, the challenge of maintaining user engagement is ever-present, but Lumikai sees India poised to become a $7 billion gaming market by 2026.

As the gaming industry continues to evolve and thrive, Salone Sehgal and Lumikai are at the forefront, investing in innovative and diverse gaming opportunities and empowering India’s next billion gamers.