Wednesday, November 5, 2008

Investors Pump $148.5 Million Into 12 Virtual Worlds Companies In Q3

By Tameka Kee - Wed 15 Oct 2008 04:12 PM PST

While VC firms like Sequoia Capital prep their startups for leaner days, and the WSJ says that marketers are planning to cut back spending on “experimental” ad buys, a group of virtual worlds companies has nearly $150 million to burn. Virtual Worlds Management reports that a dozen virtual worlds-related companies received $148.5 million in funding in Q3, bringing the total amount invested in the space this year to over $493 million. Kid-friendly worlds were definitely a focus, as more than half of the deals (worth more than $36 million) were with companies that had either launched or were set to launch youth-facing properties; but it will be interesting to see if the same level of investment is sustained in the coming months.

-- Notable deals: SF-based Gaia Online picked up $11 million in a third round led by Institutional Venture Partners. All told, the teen hangout has raised over $32 million since 2006. Hollywood Interactive Group snagged $5 million in a first round led by BlueRun Ventures. The company launched, a celeb- and entertainment-themed world for women, in June.

Ukash, an electronic payment provider (a la PayPal) picked up a $14.4 million investment from Gold Cash Investments (a subsidiary of Blue Label Telecoms) and DataCash. The U.K.-based company works with a number of virtual worlds, including Habbo Hotel and Stardoll.

-- Biggest deal: MMO and virtual world developer Trion World Network was the biggest winner, picking up $70 million in a third round. The Redwood City, CA.-based company is using the funds to develop a new MMORPG, and Interwoven, a virtual world-TV show hybrid with The Sci Fi Channel, per Virtual Worlds News.

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