16340

Zynga brewing a $250 million round?

Social gaming madness from 2010 already spilling into the new year with a new massive funding round

Financial trends and news by Ronny Kerr
February 14, 2011
Short URL: http://vator.tv/n/16ff

Being a social gaming company comes with a lot of perks. Your entire mission is to make applications that will entertain people for hours. You make money by selling things that don’t physically exist. And, if you’re the most popular company in the category, you might find it easy to raise a couple hundred million dollars in venture capital every six months.
 
Zynga could be on the cusp of raising a $250 million round of new funding that values the king of social gaming between $7 and $9 billion, according to sources close to the Wall Street Journal. Zynga did not reply to comment.
 
It would really be surprising to hear that Zynga is running out of funds, so this round would likely just be to bolster their warchest. Last summer, Japanese telecom and media company Softbank invested $150 million in the startup. Before that, in December 2009, Zynga had closed a $180 million round from Digital Sky Technologies (DST).
 
For a little perspective, the rumored round would be $50 million more than the one Twitter just raised and would value Zynga at more than double the $3.7 billion Twitter was valued at. It makes sense though. They’re both Silicon Valley darlings, but Zynga is actually making money.
 
Zynga is widely considered the most successful developer on the Facebook platform, with four titles to its name in the top ten: Cityville, FarmVille, Texas HoldEm Poker and FrontierVille. CityVille alone draws 96.3 million monthly active users. In total, the company serves 275 million monthly active users.

It’s numbers like those that are helping boost sales of in-game advertising and virtual goods sales to astronomical levels. In the U.S. alone, the social gaming market could be worth $1 billion, with the majority of that money coming from virtual goods. Zynga is estimated to have collected $850 million in revenue ($400 million in profit) last year.

While Zynga likely has much of the capital from its previous rounds in reserve, another injection of funding would still be welcomed, especially since the company is constantly acquiring smaller studios. In 2010, Zynga bought eight different game studios, a shopping spree that could easily continue this year.

Related news