Virtual Worlds Forum

Gaia Online, a social network and virtual world aimed at teens, has raised $11 million in a Series C round led by Institutional Venture Partners. This brings the total investment in the company to over $20 million. Gaia is an example of an established, more ‘traditional’ online community, established in 2003 around forums, which has grown into the virtual world space. They are now in the process of building an MMO with a persistent virtual world to follow their room-based architecture at present, and it seems likely that a good proportion of the round announced today will be spent on development of that project.

The Gaia business model is based around the purchase of virtual goods, bought with Gaia gold, which is earnable through activity in-game, or through purchase. It seems to be seeing considerable success: the company claims that there are over 100,000 transactions in the Gaia economy each day.

Despite the impressive numbers quoted by the company, of over 5 million monthly unique users and over 1 billion total forum posts, there are possible indications that growth has stalled: Compete in fact shows a fall in users over the past year, and whilst such services are far from infallible, they can provide some indication of performance. If there has been stagnation, then Gaia will no doubt be hoping that this injection of cash can revitalise growth and, with the launch of their MMO, move them along towards a successful exit.