Q1 '08: $184M Invested in Virtual Worlds

April 29, 2008

Venture capital and media firms have invested more than $184 million dollars in 23 virtual worlds related companies during the first quarter of 2008. $184,180,000 was invested in 23 virtual worlds-related companies throughout the first quarter with participation from many more VC firms and angel investors. The youth market is heating up, and the investments show the same theme: 8 investments were made in youth-oriented virtual worlds for a total of over $16 million. Mirror Worlds and mixed realities also saw a significant, though more concentrated, interest with three investments totaling over $15 million.

The total figure may seem anemic compared to Q4 of 2007's $425 million spread across 15 companies, but there are several things worth keeping in mind for any comparison.

$300 million of that period went to Zenimax Media, which we acknowledged might be considered more part of the game industry than the virtual worlds industry. Q1's figures still includes some game-related investments, but by and large this figure represents money flowing into companies aimed at more social than game-based interaction, business use, and the creation of mixed realities.

Likewise, the recession is hitting investors. Q1 represents a 4-year low in confidence for Silicon Valley venture capitalists as well as a decrease in investment for 11 of 16 industries tracked by PricewaterhouseCoopers and the National Venture Capital Association.

At the beginning of the year, though, while JP Morgan was reluctant to advise any general investment in virtual worlds, it remained very bullish on kids worlds, predicting "rapid growth" for 2008. My personal bet is that mirror worlds will see a lead-in for that growth later this year and into 2009.

Regardless of a slowdown, the industry is seeing more small investments across the board. With no acquisitions on the board, that could be a sign of current development and future growth. Numedeon, for example, took a $1 million investment this quarter to launch a new virtual world in Spain, but also announced plans to acquire another virtual world over the next year.

Virtual Worlds Related Companies Funded During Q1 2008

Source Virtual Worlds Management

 

Company	Segment	Amount	Named Investors
9You	Virtual World/Casual Games	$100,000,000	Temasek Holdings
C3L3B Digital	Stealth	$3,000,000 (may have totalled $4m)	BlueRun Ventures
Chapatiz	Youth World	$530,000	Angel Investors
Dizzywood	Youth World	$1,000,000	Shelby Bonnie and Charles Rivers Ventures
EveryScape	Mirror World	$7,000,000	Dace Ventures, Draper Fisher Jurvetson, Draper Fisher New England, Draper Atlantic and LaunchPad Venture Group
Fix8	Avatar Content	$2,000,000	SK Telecom
FlowPlay	Youth World	$3,700,000	Intel Capital and Ambient Sound Investments
Fluid Entertainment	Youth World	$3,200,000	Trinity Ventures
Gaia Online	Youth World	Undisclosed, part of a $12M round	Time Warner
Gizmoz	Avatar Creation	$6,500,000	DoCoMo Capital, Inc., and ngi group, inc.
Handipoints	Youth World	800,000	Charles Rivers Ventures and Angel Investors
IGA Worldwide	Advertising Network	Almost $5,000,000	Translink Capital, Presidio STX, LLC (a subsidiary of Sumitomo Corporation), and ITOCHU Corporation
IGG, Inc.	MMORPG Provider	$4,500,000	IDG Technology Venture Investment
iOpener	Mixed Reality	$6,000,000	Triangle Venture Capital
Kadoink	Middleware	$7,000,000	Sutter Hill Ventures
Metaversum	Mirror World	"a significant multi-million-Euro investment"	Balderton Capital
Numedeon	Portfolio of Virtual Worlds	Approximately $1,000,000	BankInter's Venture Capitol Group and Angel Investors
Outspark	Publisher and Operator	$11,000,000	Tencent Holdings, DCM, and Altos Ventures
ROCKETON	Youth World	$5,800,000	D. E. Shaw Group
Simmersion Holdings	Platform	1,900,000	Blue Cove Ventures
Sparkplay Media	Casual MMO/World with Games	$4,250,000	Redpoint Ventures and Prism Ventureworks
Unisfair	Virtual Events Platform	$10,000,000	Norwest Venture Partners and Sequoia Capital
YOOWALK	Adult World	Undisclosed	CITA Gestion and Angel Investors
	TOTAL:	$184,180,000