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Just when Fortune did a long story on Kleiner Perkins Caufield & Byers not investing in the Internet and Web 2.0 world anymore, the venerable venture firm unleashes a major one: San Francisco-based Zynga, which makes casual games for social network has received a big $29 million second round, led by KPCB, and includes Institutional Venture Partners and previous investors Union Square Ventures, Foundry Group and Avalon Ventures. Also, William “Bing” Gordon, the former chief creative officer of Electronic Arts (NSDQ: ERTS), will join its board.
Kleiner partner John Doerr told WSJ that this funding was “special and surprising” in part because the fund likes to invest at an earlier stage. But he was drawn to the fact that Zynga had “cracked the code” on how to develop engaging and viral games fast, the story says, which seems a bit too early to say about a company that just launched in January this year. Earlier this year the company announced its first $10 million round of funding from Union Square Ventures, Reid Hoffman, Peter Thiel and others. Whoever said that thing about Web 2.0 companies not requiring that much capital…
The company earns revenue on its games through advertising and selling add-ons, and has 18 million monthly visitors across its distributed, and is growing at a pace of 450,000 new users a day, it says. Competition includes other social network heavy gaming startups such as Social Gaming Network (which just raised a round), Slide and others. Along with this funding, the company has also made a small buy: it has acquired virtual world Facebook app YoVille.