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Large mutual funds T. Rowe Price and Fidelity Investments reportedly involved in late-stage deal
At the beginning of the week, we relayed the news that social gaming monster Zynga was nearing the final stages of securing a $250 million round of funding that would value the company somewhere between $7 and $9 billion.
Now, that very same round is said to have doubled to $500 million, according to anonymous sources close to the negotiations. Though the size of the round has doubled, the company’s potential valuation has increased only a little bit--to $10 billion.
Additionally, these sources have specifically named mutual fund giants T. Rowe Price and Fidelity Investments as potential participants in the new round, which would likely include many others. (As for the sources, it’s impossible to tell whether or not they are the same from the earlier report.) To be clear, the round has not closed and could still fall apart. Zynga has declined to comment.
Zynga has already raised around $520 million, most of which came from two rounds in the last year led by investor giants like Google, Softbank and Digital Sky Technologies (DST). Other big names that have invested in the hot gaming startup include Kleiner Perkins Caufield & Byers, Avalon Ventures, Union Square Ventures, Foundry Group, Institutional Venture Partners (IVP), Tiger Global and Andreessen Horowitz.
Regardless, there’s little doubt that Zynga would find it easy to spend another $500 million round.
The company acquired several gaming studios in 2010--the latest was Newtoy in December--and could have plans to snap up more in the coming months. Today, the company employs over 1,500 people (remarkably close to the 2,000 employed by Facebook, the company that can take pretty much all the credit for Zynga’s existence).
Besides, that age old entrepreneurial funding advice holds true whether you just launched yesterday or whether everyone thinks you’re going public tomorrow. Raise money when you can, not when you need it, because that’s when you get the best deals.
And, because I refuse to end an article about a gaming company without talking about games, let me just mention the obvious: Zynga still rules the Facebook platform. The top game on the entire site is CityVille, which launched in December 2010 and now boasts 95.5 million monthly users. The second most popular app, FarmVille, launched in June 2009 and still has 51.4 million monthly users. Now, that’s pretty impressive.
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Zynga is the largest social gaming company with 8.5 million daily users and 45 million monthly users. Zynga’s games are available on Facebook, MySpace, Bebo, Hi5, Friendster, Yahoo! and the iPhone, and include Texas Hold’Em Poker, Mafia Wars, YoVille, Vampires, Street Racing, Scramble and Word Twist. The company is funded by Kleiner Perkins Caufield & Byers, IVP, Union Square Ventures, Foundry Group, Avalon Ventures, Pilot Group, Reid Hoffman and Peter Thiel. Zynga is headquartered at the Chip Factory in San Francisco. For more information, please visit www.zynga.com.