Zynga, the social gaming behemoth is about to complete a $500 million round of funding, confirms two separate reports from AllThingsD and New York Times. We had previously reported that Zynga is in conversations with investors to raise $250 million from new round of funding and we also assumed that if the new round of investment takes place then the company would be valued at $10 billion.
Evelyn Rusli of New York Times reported, “The company is in talks with the mutual fund giants T. Rowe Price and Fidelity Investments, among other investors, for a round of financing near $500 million.” Rusli adds, “Zynga is also contemplating filing for an initial public offering as soon as the first quarter of 2012.”
Kara Swisher of AllThingsD confirmed this by saying, “The big funding is essentially a precursor to an initial public offering.” “Zynga has already raised more than $500 million from a panoply of Silicon Valley VCs such as Kleiner and Andreessen Horowitz, as well as Russia’s DST Global,” added Swisher.
We have become habituated in seeing social media companies receiving enormous funding. Some social media topshots had been funded with unreasonably high amount. Facebook raised $1.5 billion from the investments carried over by Goldman Sachs and Digital Sky Technology. Groupon turned down the takeover offer from Google and thereafter underwent massive funding by various investors due to which their projected valuation at IPO is expected to be around $15 to $20 billion. “The massive valuation for the San Francisco-based Zynga comes after similar rounds by large Wall Street players in social media hotshots,” writes Swisher.
Zynga stands tall amongst other social media outlets. The games developed by them — FarmVille, CityVille, MafiaWars have gathered immense popularity. A lot of this success has to be credited to Facebook. Since the platform itself has 600 million users, the growth of Zynga was evident. They may appear dependent on Facebook users in this sense, but social gaming industry as a whole got a mention, thanks to these folks. Also, Zynga has kept on trying to establish itself as an independent developer as well as distribute its games to other social networking channels.
Such growth potentials must have impressed the venture capitalists. The profit figures are also impressive enough as the company annually gathers $500 million to $1 billion in revenues. So hoping they will increase their user base and bring more ad revenues, investors decided to put their money on Zynga.