by Erick Schoenfeld:
“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.”

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by Jessica E. Vascellaro:

“Zynga, which in January announced its first $10 million round of funding from Union Square Ventures, Reid Hoffman, Peter Thiel and others, is showing signs of pulling away from the pack. The company, which earns revenue through advertising and selling add-ons for its games, said it has 18 million monthly visitors, and is growing at a pace of 450,000 new users a day. “

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San Francisco – July 23, 2008 – Zynga, the largest social gaming service, announced today that it has completed a new round of funding led by Kleiner Perkins Caufield & Byers along with Institutional Venture Partners (IVP). The $29 million investment also includes funding from previous investors Union Square Ventures, Foundry Group and Avalon Ventures. The funding will be used to accelerate Zynga’s creation of next generation social games.

The company also announced today that Kleiner Perkins partner and former chief creative officer of Electronic Arts, Bing Gordon, will take an active director role in building the company. He will join LinkedIn’s chairman Reid Hoffman, Foundry Group’s Brad Feld and Zynga’s CEO Mark Pincus on the company’s board of directors.

In addition, Zynga announced today that is has acquired YoVille, the largest virtual world game on social networks.

“We are excited that Kleiner Perkins and IVP are joining our terrific investor group,” said Pincus. “With this new investment, we are doubling down on social gaming, raising the production quality and scaling the infrastructure. We’re also excited to have Bing, who has been an amazing contributor even before becoming formally involved, join in an even more significant way.”

“Social gaming is one of the most exciting applications of the consumer Internet,” said John Doerr, partner, KPCB. “Zynga gives its millions of customers a new way to make friends and have fun on the web.”

“Mark and the talented team at Zynga have the same kind of vibrant energy we had in the early, industry-defining years of EA,” said Gordon. “But their designs, technologies and approaches are all new, and are further broadening the reach and promise of interactive entertainment.”

“Social gaming, and Zynga in particular, is bringing gaming to the mass market,” said Sandy Miller, partner, IVP.

Savvian Advisors, LLC, served as the financial advisor to Zynga for this transaction.

About Zynga

Zynga (www.zynga.com) is the largest social gaming company. Zynga games are available on Facebook, MySpace, Bebo, Hi5 and Friendster and include Texas Hold’em Poker, Blackjack, Mafia Wars, Scramble, Word Twist and Triumph. The company is funded by Kleiner Perkins Caufield & Byers, IVP, Union Square Ventures, Foundry Group, Avalon Ventures and The Pilot Group, as well as leading individual investors Reid Hoffman and Peter Thiel. Zynga is headquartered at the Chip Factory in San Francisco.

About Kleiner Perkins Caufield & Byers

Kleiner Perkins Caufield & Byers is passionately committed to helping portfolio companies succeed. Entrepreneurs gain access to KPCB’s matched portfolio of companies and associations with global business leaders. These relationships are the foundation for strategic alliances, partnership opportunities and the sharing of insights to help build new ventures faster, broader and with less risk.

About Institutional Venture Partners

With more than $2.2 billion of committed capital, Institutional Venture Partners (IVP) is a premier later-stage investment firm in the technology and media markets. Founded in 1980, IVP specializes in venture growth investments, industry consolidations, recapitalizations, buyouts, and select public market transactions. During its 28-year history, IVP has invested in over 200 companies – with more than 80 IPOs. It has consistently delivered superior returns with a 27-year IRR of 43.2%. IVP has offices in Menlo Park and San Francisco, California.

along with our funding news, we are turning on a long overdue blog tonight. i’m excited that bing gordon, a founder of EA and partner at KP, has officially taken an operating director role and more importantly has agreed to contribute to our blog. you will see that he is a much more exciting writer. also, scott derringer, who has joined us from yahoo to run product management will be contributing, and like bing shares the distinction of being another great writer.

we are excited to have the opportunity to invest in developing the next generation of social games. our mission is to build games that *we* would play. we challenge the idea that ‘games are a great time waster’ as social games are already an important way to connect with friends and meet other real people.

-mark pincus

Hi everyone!

Welcome to the Zynga Blog. It’s an incredibly exciting time here at Zynga - we proudly host the largest game network for members of the major online social networks, and our players are passionate about our games. If you don’t know about all of the great games Zynga offers, then you’re missing out! Whether you and your friends are poker players, word-puzzle aces, or fans of fantasy and role-playing games, we have something amazing in store for you. Install one of our games and you’ll immediately see what other games your friends are playing (you’ll be surprised at how many of them already play Zynga games).

On the company side, we are growing - like crazy! With offices in San Francisco, Silicon Valley, and Toronto, we’re bringing on the best and the brightest creative minds and engineering talent we can find. We recently announced that we closed $29 million in funding led by Kleiner Perkins, and we are honored to be their first Web 2.0 investment. Thanks for the huge vote of confidence, guys!

Haven’t played a Zynga game yet? Well don’t wait another second - enjoy real fun with the friends you’ve made on Facebook, MySpace, Bebo, Hi5, Friendster…there’s so much to do, you really should dive right in!

Pick a new favorite and get started:

• Texas Hold’Em Poker - the biggest free online Poker game anywhere
• Scramble - one of our fun and fast-paced word games
• Mafia Wars - be the head of your own family and play for keeps
• Yoville - set up your home and visit friends in Zynga’s virtual world

And watch this blog for more updates as we release new games and exciting features.

-Scott Derringer

We are lucky to be living in a spectacular new era for consumer software. Developers are in a creative fervor that reminds me of the first days of computer games, with games being programmed in garages, dorm rooms and start-ups. Now three of the most important youth brands (Facebook, Apple and Myspace) have opened their APIs and SDKs with stunning success. Consumers can drink beer on their iPhones, play poker tournaments in their social portals, and put out mafia hits on friends of friends of friends. If it’s cool to reach out and touch someone, it is totally awesome to slay a total stranger.

The Facebook platform, in my opinion, changed everything when it went live in May 2007. Its developer APIs were as solid as any videogame console development tools, and it achieved mass market penetration much more quickly (Facebook apps are estimated to have reached 40 million users in just 12 months.) The iPhone apps development environment has also proven to be enormously productive, and the iTunes Apps store is clearly a new “killer app” for mobile computing. If 2007 was the year of the “API-able Internet,” 2008 is the year of the “Virtual Platform.”

I must have worked on 24 meaningful game platforms over the years, from the Atari 800 and C-64 in 1983 to Playstation 3, Xbox 360 and Nintendo Wii in 2008. I have tried to forget many of the non-meaningful ones, like PC Junior, CD-I, Sega CD and Dreamcast. There have been cyclical patterns worth noting:

• The Market Maker must have a first party brand owner and driver. No platforms succeed with brand owners who falter.
• Exclusive apps, from Halo to Mario to Facebook Photos, position platforms.
• Killer apps grow markets. The “long tail” (multitudes of games) doesn’t matter; but 3rd party software is necessary to provide breadth and energy.
• Critical mass or die. 20 million customers within 5 years in the US.
• Risk is asymmetrical. First parties “bet the company” before launch, but independent game-makers “bet the company” for years after. This creates “frenemies” who battle for game market share and profits.

The internet has changed many old patterns. Can these Virtual Platform companies re-shape the experiences of game-makers and game-players? I am hopeful.

Let the games begin!

Bing Gordon

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