Virtual currency transaction provider Tapjoy raises $21M

Tapjoy, a transaction provider for games and sites that use virtual currencies, announced today that it has picked up $21 million in its third round of fundraising after shedding a bit of a dirty image in its old incarnation.

Tapjoy was originally called Offerpal — a name synonymous with somewhat shady deals in social games. Offerpal worked with companies to get users to sign up for deals ranging from credit cards to Netflix subscriptions. Users earned Farmville cash and other types of virtual currencies after signing up. Critics said the deals sometimes tricked users into signing up for things they didn’t want.

Offerpal bought Tapjoy in February last year, and changed its name to Tapjoy as part of a renewed focus on mobile applications that use virtual currencies. But it was more about shifting away from that image associated with inappropriate promotions and tricky situations on social networks. As of October, the company was managing around 250,000 virtual transactions each day from apps running on Apple’s iPhone operating system.

Advertising deals that give users a way to “earn” virtual currencies like Farmville cash are still a big part of the company, said Shannon Jessup, vice president of global sales and marketing for Tapjoy. The company still works with retailers like The Gap and Blockbuster to give users access to deals and other ways to earn virtual currencies. There are around 1,200 different advertising deals available to users.

Facebook plans to migrate its entire system over to Facebook Credits, an official virtual currency for all the applications running on the social network. But that hasn’t happened just yet, leading Tapjoy to bring in its best month of virtual currency transactions yet in December, Jessup said. Tapjoy is already prepared for the upcoming switch over to Facebook Credits, and is used on a number of other social networking sites like MySpace and Yahoo. It’s also the transaction method for some stand-alone games like Gaia Online.

The funding is intended to help market Tapjoy’s services internationally. The company especially wants to expand in Asia, where social games and virtual currencies are prevalent, Jessup said. The company also plans to hire additional staff.

The San Francisco, Calif.-based company has raised $40 million to date. Rho Ventures led the latest round of fundraising. Existing investors InterWest Partners, North Bridge Venture Partners and D. E. Shaw Ventures also participated in the round.

Tags: social games, social networking, virtual currencies

Companies: Facebook, MySpace, Offerpal, Tapjoy, Yahoo

People: Shannon Jessup