Ice Age for Web3 startups looking for funding, says Hungama's Neeraj Roy

Startups, particularly those building products in the Web3 segment, should keep up with the trends and technologies in the market and innovate accordingly to remain relevant, said Neeraj Roy, Founder, Hungama Digital Media Entertainment.

Although he was bullish on the disruption of and demand for Web3 startups, Roy cautioned that capital may not be as easily accessible as it was a few years ago.

“The funding in the Web3 segment is ‘Ice Age’. You might as well prepare for it," he said during a fireside chat at YourStory's Mumbai edition of TechSparks 2023.

Roy advised startups to not look for capital only from a valuation perspective. "Value comes before valuation. If you are building the blocks right and filling the need gap in the most disruptive market, capital will always be available to you."

He reminisced about the time when one of Hungama's principal investors, ICICI Ventures, had pulled out funding from the company in October 2009. It had disbursed only 55% of its total funding before pulling the plug, he said, pointing out that Hungama had later bought out ICICI Ventures’ stake in the company.

“The dot-com crash happened, and things did not come through," he elaborated. "Our business was much smaller. We were mere two months old, had Rs 25 lakh monthly revenue, and a cash runway of 4-5 weeks. I prepared my colleague for the crisis."

The company did not raise money for the next four years and went on to reboot its business.

“We stuck around. That was important,” he emphasised.

Roy also stressed the importance of mapping the audience and continuously innovating as per their needs to stay relevant amid competition. 

“Looking at the younger generation and adapting our product to stay relevant accordingly worked for us. If you haven’t anticipated when to move/pivot, you will become redundant,” he said.

Transition to Web3

Hungama Digital Media Entertainment started in the music segment as an aggregator and later ventured into mainstream videos and gaming, and now Web3. 

Last year, Hefty Entertainment, a Web3 initiative of Hungama, launched Hefty Marketplace, a platform of NFTs for the media and entertainment industry. It collaborated with actors to drop NFT games and digital collectibles of movies in the metaverse.

“Web3 was a natural transition for us," said Roy. "(The) Entertainment industry has been a catalyst for embracing a new set of instruments and, as the market prepares for 5G, we transit our existing consumers and prepare them into a more immersive world."