Massive investment into social games and virtual worlds

Jussi Laakkonen of social gaming stealth startup Everyplay has a great post tracking investment in the social games and virtual worlds space.  The simple message – there is a whole heap of activity, with roughly $2-5m being invested per week, and some large individual deals, including Balderton‘s investment of $87m into Big Fish Games.

Check out the post for the long list of individual deals.

Jussi makes the point that all this investment activity is a sign that the sector will generate massive profits in 4-7 years.  Anyone who reads this blog regularly will know I share that view.  What I am starting to worry about a little though, is that the amount of investment is getting out of kilter with the size of the opportunity, which might lead to what one of my partners has described as venture fratricide.

That said, most of the investment is US based and I think some of these plays will turn out to be geographically/culturally focused – which makes me more optimistic about the prospects for future investment in this space in Europe.

  • It was an impossible challenge trying to find any comprehensive data about European VC investments in this space – which there just has to be. As an entrepreneur I have to be a betting man ;-), so I’d bet the investment in Europe is around 25% of that in the US. Leaving out the the two big deals, 25% would mean $40 million invested in Europe during 2008 on top of the deals listed in the table.

    This table really come out a casual discussion with Accel Partner’s Heikki Mäkijärvi at the recent SIME Helsinki event. Over lunch I claimed that the VC investment pace was around $2-5 million a week, and I just had to back it with some research. The average turned out to be around $4,5 million a week (when leaving out the two big deals).

  • It was an impossible challenge trying to find any comprehensive data about European VC investments in this space – which there just has to be. As an entrepreneur I have to be a betting man ;-), so I’d bet the investment in Europe is around 25% of that in the US. Leaving out the the two big deals, 25% would mean $40 million invested in Europe during 2008 on top of the deals listed in the table.

    This table really come out a casual discussion with Accel Partner’s Heikki Mäkijärvi at the recent SIME Helsinki event. Over lunch I claimed that the VC investment pace was around $2-5 million a week, and I just had to back it with some research. The average turned out to be around $4,5 million a week (when leaving out the two big deals).

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  • Update: for the EU stuff, inspired by Jussi’s excellent post, I dug out my detailed info on EU investments I’d been tracking, and wrote it up into the same format – http://t-machine.org/index.php/2008/09/30/over-150m-invested-in-europe-into-social-games-vws-casual-mmos-games/

    Enjoy.

    (we’re going to combine this all into one big spreadsheet soon!)

  • Update: for the EU stuff, inspired by Jussi’s excellent post, I dug out my detailed info on EU investments I’d been tracking, and wrote it up into the same format – http://t-machine.org/index.php/2008/09/30/over-150m-invested-in-europe-into-social-games-vws-casual-mmos-games/

    Enjoy.

    (we’re going to combine this all into one big spreadsheet soon!)

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  • The improvement and development in social gaming have evolved into a different kind of level since it first began. So it's not a weird thing if massive investment put into social gaming and virtual world.

  • The improvement and development in social gaming have evolved into a different kind of level since it first began. So it's not a weird thing if massive investment put into social gaming and virtual world.