Indian esports tournament organizer, NODWIN Gaming, has raised INR 164 Crores ($22.4 Million USD) from South Korean video game holding company Krafton. Krafton is the company best known for PUBG PC, PUBG Mobile, and PUBG: New State. NODWIN Gaming will use these funds to develop esports in multiple markets like India, South Asia, Africa, and more by launching bigger tournaments across the multitude of countries in which it is present. AFK Gaming hosted an exclusive interview with NODWIN Gaming’s Co-Founder and Managing Director Akshat Rathee and its CEO Sidharth Kedia, where they shared the company’s plans following Krafton’s investment into their company.
The interview was conducted over a video call. The edited transcript can be found below.
Sidharth Kedia and Akshat Rathee talk to AFK Gaming about KRAFTON's Investment in NODWIN Gaming
Nishant: Without further ado, it is time to lift the curtain. What exactly is Project Potassium?
Kedia: With great pride, we are happy to announce that NODWIN Gaming has received funding from one of the biggest publishers in the world called Krafton. We have raised about INR 164 Crores ($22.4 Million USD) from them, which we will use to develop esports in the region.
Can you talk about valuations? What does this investment value NODWIN Gaming at?
Kedia: We can't talk about the valuation. That's something that we are not in a position to disclose. However, we can tell you that from the time Nazara invested three years back, Nazara's investment has grown about 6 and a half times. 6.44 times, to be exact.
Are you able to discuss what your board composition looks like post this round? Do you have anyone joining you from Krafton?
Kedia: Our board composition would still have Nazara as the majority because they continue to be in excess of 50% as shareholders and hold the board majority. Krafton has been given a seat on the board.
What about the instruments used? Is this is a straight-up equity deal, or is it a little more complicated than that?
Kedia: No, it is a pretty straightforward deal.
Did anyone else join this round, or was it just Krafton?
Kedia: Just Krafton
With the big war chest that you've now got going for yourselves, what exactly are you planning to do? What is INR 164 crore going to be used on?
Rathee: The idea here is that esports needs to go and build a new scene. With the last 4-5 years, our attempt to go to grow esports has been what I'd call sporadic but targeted. We had to go ahead and build tournament IPs, so that tournament IPs become bigger and people start understanding how to be in this ecosystem.
We had to go out and encourage team formations, and teams had to go out and start understanding what a team is and that they can't really go out and break a team every time someone says “Achoo." So we also had to get brands involved so that people understood the nature of brands around it. We also had to get publishers and broadcasters aligned: What are the key performance indicators that are important to people? How do you build a long enough ecosystem? All of these little things moved very quickly over time. If we’ve built the pillars, now is the time to put the plinth on it., Our foundations are strong, so now it is time to take it to the next level.
Predominantly, we will be using these funds for launching bigger, better tournament IPs in India and around. NODWIN is not only an Indian company right now, we have a very significant presence in South Asia and Africa now. We believe any mobile market, which are the ones in which we are very good in, is open for us to go out and grow globally.
Let’s go one level deeper into that. I personally believe that this is going to be the year of franchised leagues in Indian esports. What can you tell us about that? Does this bring you one step closer to launching India's first official franchise esports league?
Rathee: Yes, I think franchise leagues are a causality of building any ecosystem, right? It's always been a matter of when and not an if. But we need to be very clear, what is the kind of franchise league system that works for esports? We've had the pleasure and the foresight of seeing different kinds of franchised ecosystems play out in different parts of the world. We've seen the disaster that was the Console Gaming League's disaster (CGL) at some point in time. Flashpoint with Thorin moving away from it, as of yesterday, is another example of something that is working and not working. The Lanxess agreement which was signed was something that was considered wonderful by a lot of people. The Overwatch League behaves differently. But India has its own right, for example, the FA cup, the NBA 2K League, and eMLS. There are now sizeable examples of franchise ecosystems that are different, and the idea is which one will work in India; no one knows, but we will definitely try some of it.
I’m going to ask a few harder questions now. Nodwin is going global. You are now one of the largest TOs in the world after this investment. ESL, who now I would assume turns into a pseudo competitor of yours, is also an investor in Nazara. Do you see this as a conflict of interest, and if yes, how do you manage it?
Rathee: Well actually it's the opposite right now. While ESL is an investor in Nazara, ESL is one of our largest partners. We have very strong exclusive relationships for this market anyway together. I honestly think that if you put on a hat that everyone will do everything in the world, that would show that everyone is everyone's competitor. I think the synergies that NODWIN and ESL bring to the world are very, very different. I think that we are the most complementary partners ever. They are very strong in PC, and they are very strong in developed markets. We are very strong in mobile and are very strong in developing markets. We actually don't step on each other toes.
We give them the value and the growth, so when we have to go out and cooperate, for example, when we had to do the PUBG Mobile thing in Berlin, which was being broadcast in India at the same time when the World Cup was happening or when we had to go out and do ESL mobile open and were partnered with them, we work really well. We've done ESL One in India with Dota 2. We understand how to work with each other, we really like each other, and that synergy is going to be there. Yesterday we had a panel with Confederation of Indian Industry (CII) where Ralf (Co-CEO of ESL) and I were together; that was something that is again talking about how we can work all work together and build esports.
You've got an investment from a publisher now, and as a tournament organizer who works with multiple game titles, does this investment, in any way, prevent you from working with Krafton's competitors?
Rathee: Well this is the third publisher that I am getting money from. I had money from JetSynthesys, I had money from Nazara, and now I've got it from Krafton. I think we know how to work with publishers. It is a minority deal. I think it is in everyone's interest for shareholder value creation to work with multiple partners. We are a tournament organizer. We are not Major League Gaming (MLG), we are not sold fully to Activision-Blizzard, this is not an in—house publisher esports division. If that day happens, it is great, but as of right now we are very free to work with anyone we want and to go around and keep on building this. Krafton is not looking at us as their in-house tournament operator. They are not going and saying, because of this, we are sorted. They'll invest a little more in the future if that's what their desire is.
Am I understanding this correctly then? Does this also give Krafton the ability to work with NODWIN's competitors for its events?
Rathee: Absolutely. "Should they?" is the question. Remember the difference between optionality and compulsion. We have all got the right to go out and work with different people, but does it make sense to go out and work with different people is the choice that we need to evaluate.
Kedia: Just to add to that, contractually, we don't have any exclusivity one way or the other. Both parties are free to work with any of the competitors, but like Rathee said, it has to be evaluated on the merit of that partnership, and then both of us need to ask ourselves, is it worth working with a competitor?
The million-dollar question, and the one I’m sure our readers are most interested to hear about. Krafton is immediately associated with PUBG Mobile and in India, it is associated with the game’s return to the country. How does this investment now tie into the whole story PUBG Mobile's return to India?
Rathee: Not my call to say. I know it is a question that everyone is keen to learn more about but I am not the publisher here. I am not to privy to this. I've asked this question to Sean (head of corporate development at Krafton), one of the guys from Krafton, very simply in a conference where we had a fireside chat His answer was the right one. They are trying, they will continue to go out and try, they are invested in this market, it is a very important market and they're a Korean company. What happens after that is something that will come out of efforts on all sides to go ahead and make it happen. But as NODWIN we have no play in that answer.
I expected a similar answer. But hey it was worth a shot guys!
Rathee: *laughs* I know, but this is not a cop-out answer. What will I do? It’s his game!
Fair enough. Let’s talk more about this deal. It couldn’t have been easy, especially with the game being banned and a pandemic taking place over the last year. What did it take for you guys to get this deal done and who were the key folks involved in making this a reality?
Rathee: Well, I’ve got a grey beard now, if that helps. I joined Gautam and Sid (Kedia), who I’m pretty sure got some of their grey beards due to me. We have this core team in NODWIN that I am extremely proud of. My co-founder Gautam Virk is just the opposite of me, he is just this gentle giant who sits out there and gets stuff done. We have Sid, who has brought some great corporate expertise and fundraising expertise with us. We also have Shefali and Ekansh, who have their own extreme loyal views around commercial, legal, contracts, and project management. And then, we have our own extended group that includes the division heads and HODs: people like Lalita, Kunal, Kanwar, and Vishal, who are all in NODWIN and leading some of our key roles. These are the people who we are extremely proud of moving forward.
While it is nice and easy to go out and say, "hey this is nice," it has taken us five to six years. Nishant, I still remember you personally writing the obituary of the Indian Gaming Carnival fiasco. We were all there and then we've built this. Honestly, this might sound weird. But you've been just as important. What AFK Gaming has been able to go out and do: build its own space in this ecosystem of going and having a view of India that people worldwide read has been as important as anything else. We wouldn't have been able to do it without that ecosystem.
Kedia: To add to what Akshat said, it was the collective belief and passion that the company had. Everyone in the company is so passionate and determined about building esports. The vision that Akshat brings to the table of what esports can become, not just in India but globally, and then everyone buying into that vision. I think one of the reasons why some of these juggernauts slow down is when one person on top believes in something, and then the rest of the organization is like, "I don't know what this guy is talking about."
I think there is a collective belief in the organization. Everyone is as passionate and driven and bought into the vision that Akshat brings to the table. And of course, you've known Akshat as long as a lot of us have, and you know how crazy he can get when he really believes in something. We were true to the cause, whether a pandemic hit or whether there was geopolitical tension that leads to some kind of a fallout. We were very clear that these are small blips and that we bought into our long-term vision, and we were continuously working towards that. We remained true to our purpose, and I think that has helped us even in these times, despite everything else, to raise this capital. It is because of the sheer passion and long-term belief that esports is the next frontier for sports entertainment.
You have come a long way from LAN Cafes and IGC Fiascos and such. Beyond the people and the companies and the ecosystem that helped you, can you tell us about the biggest challenges you faced along the way and perhaps talk about the biggest challenges you've faced over the course of NODWIN's life so far? Was there ever a moment where you said we might just be done here?
Rathee: Five times, six times! I'll tell you when. The universe conspires very weirdly to go and make some of the things that you want to come true.
In 2018, when we were all sitting down, Ronnie Screwvalaji had gone and announced UCypher, Manish and Nazara had announced that they were going to be making their own league, Jio was going and announcing its esports plans, and I was like, "I don't know whether we can do this. I don't know whether we have the capital or the manpower." We were still a small company at that time.
This company doesn't have a B2C play. We never had a B2C play. We've never been built on dreams of valuations that are actually sitting on loss-making ventures. We had to go ahead and make ourselves sustainable. So, one of the biggest challenges for us is being profitable throughout. That's the one thing that has been the toughest challenge for us. It has required pain and sacrifice, and we've sacrificed growth so many times. To go out and say we don't know where our next two years will come from, but this is what we have.
If we look across the world, the first-mover advantage in esports or at least in the framework of building the ecosystem of esports, especially from a tournament organizer and an IP creator’s perspective has been longevity. If you survive five years, you are number one in that area. We've seen that with multiple companies in multiple markets. This is pretty much the secret sauce. Survive for five years in that market, and you'll somehow be really big, don't ask me how! The answer is, how do we do that? If that is the one key indicator that people will value us at, and it is the key to success, how do you last five years without becoming irrelevant while being among the top of what you do?
For us, the other one has always been this perennial challenge around growth. People ask us if CS:GO is dying? Is Dota 2 dying? Is Valorant dying? Is Call Of Duty dying? Is PUBG Mobile dying? Sometimes, we just get sick of this question and ask “okay, so what is living?”. If the idea is to go out and destroy every game, every community, every benchmark, what is value and what is growth? This was something that we had to discover over the last five years.
Kedia: One of the things that we always miss and undermine about capital is that it is the easiest thing in the world to grow on the back of it. Saying I have a lot of capital to grow, let me put out the best and the biggest tournaments out there. I don't care whether I make money or not because I have the capital to burn. Let me do it for one or two years in a row; eventually, someone will notice, and money will start coming in.
Nodwin didn't have that luxury. We didn't have too much capital. So, what does that mean? It means that you can't splurge on the events outside, you can’t hire the smartest people around. Although I'll have a separate conversation around smartness and dedication, I am becoming a convert very fast now. The fact is that the NODWIN team had to work around five to ten times harder as compared to any other team that would have built a business like this with adequate capital. So I think the capital will always remain a challenge when we are trying to grow the way in which we have grown. And I think we have compensated for the lack of capital by sheer grit, determination, passion, and drive, which is the hallmark. If you ask me, there is one thing that is a common thread between every single person who works in NODWIN, and it is these four things. They're determined, they have the passion, have the grit, they will not give up and everyone has bought into the vision that Akshat brings into the table, which is to create a legend in the esports fraternity around the world. Let's see whether we make it or not, but we have bought into that vision.
As an esports company, the Venture Capital market here in India is brutal. Every time you go out there, especially as a B2B company with high pass-through costs for your events, you probably get slammed, saying that "What do I value this on if you don't have a really strong bottom line?" Sidharth, I’m sure you’ve had to field a lot of these questions for NODWIN. What's your response when someone comes and tells you that they don't think this is worth valuing at X Million Dollars?
Kedia: I've had this exact conversation when someone came and asked me, "what is your valuation expectation?" And I told them to which they said, "you are not a consumer internet company. Why are we valuing you like that?" My response is always: B2C, give me money, I'll throw it away. Media houses will make money because I'll spend it on advertising and everyone will be happy. But as a B2B company, is it harder to scale? Yes. Will it scale the way a B2C company will? No. But I have only one question to ask. How many B2B companies have you investors seen in your lifetimes that have grown at a CAGR of 100%+ with minimal capital? You help me answer that question, and you'll get your valuation answer. That's been my simple answer every single time.
You come from a corporate background, working in very large companies, to the tornado or the whirlwind that is NODWIN Gaming. What were your first few months like? Was it a full culture shock for you? Did you have some time adapting to the lifestyle in NODWIN? What was your reaction when you entered NODWIN Gaming?
Kedia: I have been associated with the startup culture for a very long time in my life. When I started my PE fund, we started out as a startup. Three of us sat down in one room with paper and pen to draft our investment strategy and did road shows for the next year to raise capital. So we were still aware of what it takes for a startup. We used to invest in companies like NODWIN Gaming and worked very closely with them. But having said that, after that, I had a segue of about four to five years where I worked in the corporates and then came back to NODWIN.
Despite all my experience, was it still a cultural shock? Yes, it was, because of the comforts of corporate life, you get used to very fast. Ten people are working for you, anything that you need to do, you can call people. But all of a sudden, you come to NODWIN, and you see that it doesn't matter who that person is (including Akshat). Everyone there constantly has their sleeves rolled up, and they are working on things that they're not supposed to do.
In fact, if you ask me, my first few months, my fights with Akshat used to be: “Dude, value your own time, don't do the kind of stuff that you're doing.” Akshat was like, "Sure, I will not do it. Who is going to do it? I still need my profitability!"
My whole shift was, do we need smart people? Do they bring value to the table? Absolutely. There is no doubt about that. But is that a substitute for the kind of dedication that folks bring in at our company? The answer is no. I would choose dedicated people over smart people any day. Sure, if I can get smart and dedicated, great! But dedicated, passionate, driven over smart? I will choose the former. And that’s me being a convert. A year back, I had the exact opposite conversations with Akshat where I asked him about some of the folks that we weren’t getting.
Knowing the core team of NODWIN, the ones that have stuck around the longest are possibly irreplaceable in the esports ecosystem today. That mantra does seem to be working for you. I am glad to hear that you've jumped over the fence as well Sidharth.
Rathee: 14 hour days are a thing. Good or bad.
Kedia: Nishant, let me also add to this. For the first time in my working life, which spans over more than two decades, I have come to an organization that does not have a six-day week. Instead, it has a seven-day week.
I have worked in organizations that have five-day weeks. So the first time I came to NODWIN, I told Akshat: I didn't ask you one question about the number of workdays, and now you're telling me we work on all days of the week! *laughs*
Rathee: That's the one question he didn't ask! A lot of us do it because it is fun. It’s still fun, I love going and doing this. Saying, hey, there is this new game, what kind of format can we do, what kind of new tournaments could we host? Is the community liking it? Can we test this out? Can we go out and do this? What is actually cool?
My steam list is huge, because I try new games. After all, this is who we are in the business of gaming and esports. We need to understand what makes people fly what people like or don't like. We are in the youth entertainment or sports entertainment business. That is who we are. If we go far away from that, then we are actually kidding ourselves.
I agree. I can relate. When you sit down and find a new opportunity and want to move on it quickly, it’s very similar for us on a smaller scale. Every time we launch something new, like when we see "+1 purchase on our premium bundle" or when we see so many real-time viewers on our Google Analytics dashboard, everyone is over the moon; these small wins are really what keeps everyone going in the team. I am curious to hear about how the team celebrates after this.
Rathee: The team will be finding out when you are releasing this video. Today is the time when we go public, within the team as well. Not many people knew about it because of the very strong NDAs that are currently in effect. So yes, it is going to be a good time.
Towards the end of the interview, Rathee and Kedia also thanked and gave a shoutout to their families and those of their employees, who had sacrificed a lot in this journey and have stood by their side.
Disclosure: NODWIN Gaming is a minority investor in and a client of AFK Gaming.
Transcript prepared by Vignesh Raghuram.