SAN FRANCISCO (Private Equity Week) - Venture capitalists appear to be rushing to “check in” with location-based social networking startups that are experimenting with ways of harnessing users’ data from mobile phones.
Last week, Accel Partners led a $20 million investment in Booyah, maker of an iPhone game called “MyTown” that uses data culled from the iPhone’s GPS. The game invites players to check in to real-world locations, such as coffee shops, and then “own” them virtually, collecting rent from other real-world visitors.
Accel joined previous investors Kleiner Perkins Caufield & Byers and DAG Ventures to fund the Palo Alto, California-based startup, which added Jim Breyer, a partner with Accel and a board member of Facebook, to its own board of directors. Booyah has now raised $29.5 million since its inception.
Booyah co-founders, who include CEO Keith Lee, Chief Creative Officer Brian Morrisroe and CTO Sam Christiansen, each previously worked at gaming company Blizzard Entertainment, responsible for such popular titles as “Diablo” and “World of Warcraft.” In announcing the funding last week, Booyah said that the company will hire people and invest in new projects, details of which have not yet been disclosed.
The company’s signature game “MyTown” has been likened to a real-world Monopoly board game. Users can purchase upgrades from the company to enhance their enjoyment of the game, similar to how Zynga Game Network monetizes “FarmVille” and other games on Facebook.
The company reported it has 2 million users of “MyTown” and is growing at a rate of 100,000 users a week. Booyah’s founders have pegged the number of buyers at about 5 percent of its users.
During the last five years, startups have tried to integrate data from GPS-enabled phones into a number of different applications. There are location-based advertising startups, location-based dating startups, location-based social networking startups and location-based microblogging startups. Booyah is believed to be one of the first startups to try to utilize location data for gaming.
Other startups are working to integrate aspects of gaming into their location-based social networks. Loopt, a Mountain View, California-based GPS social network, is working to create a scavenger hunt-style game for its popular mobile phone application, according to reports.
To date, Loopt has raised $27.5 million from New Enterprise Associates, Sequoia Capital and other investors. Its last round of investment, an undisclosed amount raised in March, valued the company at $175 million, according to data from Thomson Reuters.
New York-based Foursquare makes a sort of game out of checking in to certain locations, awarding active participants with virtual badges to mark their achievement. The company has raised $1.35 million from venture capitalists, including O’Reilly Alpha Tech Ventures and Union Square Ventures, although the company has reportedly been in talks with Accel, Andreessen Horowitz, Khosla Ventures and Redpoint Ventures for its next funding round that could value the company at $60 million or more.
Foursquare, which was co-founded by entrepreneurs who previously sold a location-based social networking company called Dodgeball to Google, has similarly been likened to Booyah. However, Foursquare is more about users telling friends where they’re at and earning real world discounts from certain retailers, “MyTown” is about visiting places as part of a social gaming experience.