Butterfly Nets $10M for Games

Typical venture investors may not be diehard video game enthusiasts. But they are just as eager to help put home computers to use in the world of online gaming.

Butterfly.net, which provides infrastructure technology for online games, is expected to announce this week that it raised $10 million in Series C financing. New investors JVP and Worldview Technology Partners co-led the round and together invested slightly more than half of the $10 million. Other new investors include Cisco Systems and Copan. Previous investors Adena Ventures and Walker Ventures also participated.

The round was an up round with an undisclosed post-money valuation. The company had raised $7.2 million of the Series C by early September 2003, with a valuation of $12.7 million, according to the MoneyTree Survey from PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association. This more than doubles the Series B round’s valuation, which was listed at $6 million.

The Martinsburg, W.Va.-based company will use the larger part of its Series C capital to promote its flagship product, the Butterfly Grid, which provides network resources to online games, allowing for faster moving games and larger online gaming groups.

“Online games are something that people will pay for,” says company CEO David Levine.

So far investors agree. The venture world has seen a healthy flow of investment into online gaming companies. In December, two online gaming companies raised funding. Turbine Entertainment Software raised an $18 million Series A round and GameTrust raised a $5.5 million Series A. Analysts such as ComScore, the NPD Group and the Online Publishers Association have documented significant increases in online gaming software sales and predict a continued increase in online gaming spending.

JVP Principal Allon Bloch, Copan Partner Spencer Hyman and Worldview General Partner Colin Savage all joined the board, alongside Gina Dubbe, a managing partner of Walker and Lynn Gellermann, president and COO of Adena.