Social Games Developer CrowdStar Raises $23 Million From Time Warner, Intel

Crowdstar

CrowdStar, a social games developer that has attracted past attention of Microsoft (NSDQ: MSFT), has closed its first-ever round of institutional funding. It got $23 million in a round led by Intel (NSDQ: INTC) Capital, Time Warner (NYSE: TWX), with additional participation from China’s The9 and NVInvestments.

The proceeds will go towards hiring about a hundred employees such as game developers, server developers, artists, producers, business analysts and content managers.

The Burlingame, CA-based company is taking funding a year after acquisition talks with Microsoft broke down. CrowdStar, a YouWeb incubation, was founded in 2008 and has never before taken in institutional dollars. The company says all of its growth to date has been funded from operating profits. It claims that Q1 saw it take in the largest amount of revenue in Crowdstar’s short history, thanks mostly to hit games like Happy Aquarium, Happy Pets and It Girl.

A recent eMarketer report said that social gaming revenues were $856 million last year, but will experience explosive growth this year, hitting $1.3 billion by 2012. In terms of the shifting share, virtual goods will barely move, retaining a nearly 60 percent share of the social gaming revenue pie with $792 million next year. Advertising will grow from a 14.1 percent share of the market with $120 million spent in 2010, to 20.5 percent share with $271 million in 2012.

Given that environment, and the need to maintain its growth amid tremendous competition, Crowdstar decided that since it’s going to go it alone for awhile, the only way to keep up was to take a large round and attach itself to some high powered tech and media companies. The China connection to The9 and NVInvestments will also help fuel geographic expansion in what’s shaping up to the largest market for mobile games.

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