Social gaming network Zynga just got some serious funding. It raised $29 million in a B round led by Kleiner Perkins. (IVP and prior investors Union Square Ventures, Foundry Group and Avalon Ventures also participated in the round). The company is also announcing the acquisition of YoVille, a virtual-world app for Facebook with 150,000 daily active users. And, along with the cash, new Kleiner partner Bing Gordon is taking a board seat and an operating role at the startup.
Bing recently left Electronic Arts, where he was the chief creative officer and an early employee. But he was already an informal adviser to Zynga, and helped bring the deal to Kleiner. Zynga CEO Mark Pincus says:
He is super-involved in product strategy, brings the gaming DNA to us, and is an amazing CEO coach. He’s already stopped us from doing stupid things.
Like what?
Stupid things like build a PC downloadable MMO game that would cost anywhere from $5 million to $30 million, and would be free to play with virtual goods.
That’s a dig at other gaming startups. Zynga specializes in casual games you can play with your friends on social networks. Some of its hits include Texas Hold’Em (with four million hands of poker played daily), Attack, and Scramble. Al told, they attract 2.9 daily active users across Facebook, MySpace, and other social networks. On Facebook alone, Zynga’s games have 1.6 million daily active users (right behind Slide, RockYou, and SA Ventures).
The company raised $10 million just last January, and Pincus claims he still has all of that money in the bank and is cash-flow positive with 80 employees. But he feels the stakes are about to get higher as the worlds of casual social gaming and online video games collide. That means he will have to spend more money on both production values and marketing. Pincus tells me:
I think in 18 months these games are going to be highly graphical and immersive. You will be able to jump in and have a casual experience of today, and if you want to go deeper you will be able to.
As it becomes harder to get viral growth, you will need marketing.
Zynga uses its most popular games as a distribution mechansim for new games by cross-promoting them. But Zynga is not alone in trying to build a social gaming network. Competitor SGN raised $$15 million last May, and counts Jeff Bezos as an investor. Both are trying to disrupt the current gaming giants (like EA) with lower development costs, lower marketing and distribution costs, and more social gameplay.
Pincus wants to keep his player acquisition costs low, but add in some of the deeper engagement that online multiplayer games enjoy. He is building some of these games now. But he no doubt will do more buying of small fry gaming app startups. (Playfish looks like bait in this area).
Congratulations! The games are highly addictive.
29 million round - that’s alot of money.
Congratulations!
I was loving YoVille, donno what all will happen to it
:(
This acquiring is bad thing
“Al told, they attract 2.9 daily active users across Facebook, MySpace, and other social networks.”
Who’s Al, and why are we listening to what he has to say?
Wait, what happened to “Kleiner Perkins doesn’t do web 2.0 investments anymore”? You don’t get much more web 2.0 than social games on Facebook…
Does anyone have a guess at what valuation this round was raised at?
$29M for casual games for social networks? You must be kidding me. Good luck.
gaming is also a good way to wash money, with Web 2.0 or with casino.
Just come up with some me too idea that wastes peoples time….and VCs lineup to fund you, where is the innovation!!?
You are sooo right !
If it’s not for a band of lemmings rushing off the cliff,
VCs wouldn’t get any exercise ; )
Innovation requires SOME risk that can be overcome
by the intelligence to envision what’s next.
Too much brain work required.
Old school games are the best. http://blabtech.blogspot.com
What does this mean to people now on Yoville ??
Congrats to Greg/YoVille and Mark. Yoville and Greg are both awesome. Greg deserves all the success and recognition… Great has always push the envelope of Facebook, operating his company in the tiny town of London, Ontario of all places, miles away from the Canadian tech hub that is Toronto.
Go Canada! =)
Can you ask Al, what did he do with the other 0.1 of the person???
Will Zynga thrive or fail? http://snurl.com/33o0l
Something doesn’t smell right. Zynga has at least $10m in the bank and yet feels the need to raise $29m more?
I’m surprised that everybody has focused on the fact that the money is going to casual games on social networks and less on who is joining the team. Bing Gordon founded EA and has been a thought leader in the industry for the past 25+ years. Gaming is a huge industry (multi-billion $) and continues to grow quickly. There aren’t many people out there who understand it better than Bing. This is the guy that joined EA when it was a 10 person company and helped it grow to the multi-billion dollar company it is today. If anybody in VC can spot the next big thing in gaming, it’s him.
Congratulations Zynga!!
Great to see the ex-support.com guys fatting their war chest. There are a lot of competitors in this space and some shaking out in the industry is not to far away. What are some of the main differentiators for this company from their competition?
Casey
I agree that productions costs in this space are going to rise over the next few years as more people want a piece of the market. So filling up the warchest is probably wise.
29 MIL for an app, now that is a lot of money… http://blabtech.blogspot.com
Once again, those who don’t need the money get it…
We’ll see if this knee jerk investment is still valid in a year.
Zynga might have great investors but their customer service skills, responses when applications or users have issues is sorely lacking. Zynga now is responsible for Roger Dickey’s Mafia Wars application on Facebook, which is riddled with issues, players can be maxed out in a matter of mere months all causing players to leave in droves because no one will respond or fix any issues.
I, for one, would never invest in a company like this.
fuck this company… bunch of fucking wack jobs. they should just go into the merkin selling business. theyd be much better off in the long run.
dunt know much about it yety jus learning dunt even no how to move my furniture yety
hi! i love yoville sooooo much.i am addicted to it. i think yoville is the best game ever.
but i can’t play it for 2 days.my pc stops when downloading.i try to download adobe flash player 9,but it doesnt work.pls help me what i should do about this.thanx….
hola que esto solo tengo 60 años no se de que me habla esta computadora me ayudarian