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Report: Game maker Zynga in talks to raise $250M

Mon, 02/14/2011 - 5:05am

Zynga, the company behind popular Facebook games such as "FarmVille" and "CityVille," is in talks with potential investors to raise about $250 million, which would value the young startup at between $7 billion and $9 billion, according to a published report.

The Wall Street Journal, citing unnamed sources familiar with the matter, said in a report Monday that a decision to raise money could be weeks away and may or may not happen.

The report comes as the market for Internet startups is heating up. Facebook, the biggest by far, is worth $50 billion, based on its latest round of funding. AOL Inc., meanwhile, recently agreed to buy online news and opinion service Huffington Post for $315 million and The Wall Street Journal has reported that short messaging service Twitter may now be worth $8 billion to $10 billion.

Pandora, the popular Internet radio service, and LinkedIn, the professional networking service, have both filed papers for an initial public offering.

Zynga makes most of its money by selling virtual items for real money in its games. These can be tools and seeds in "FarmVille" or poker chips in "Zynga Poker." Players generally purchase credits to buy these items in blocks that sell for as little as $1.50 for 15 credits to as much as $10 for 100 credits. In the game "Café World," 10 credits, or $1, will get you a virtual stainless steel sink.

This, according to unidentified people cited in the report, helped San Francisco-based Zynga generate about $400 million in profit last year on revenue of about $850 million. A Zynga spokeswoman declined to comment.

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