Interview: Crowdstar Raises $23M Toward Growth Efforts From Major Investors

Social game developer Crowdstar (It Girl, Happy Aquarium) is starting to think beyond Facebook, and has just raised $23 million from Intel Capital, Time Warner Investments and Chinese online game firm The9 to help reach its goals. The funding round is a first for Crowdstar. Since its 2008 founding, the company has been funded by its own operating profits, which it says saw an all-time high in the first quarter of 2011. Currently employing 100, the company says the primary purpose of the investment funds is to help it grow. Crowdstar CEO Peter Relan tells Gamasutra that the company hopes to double its headcount with a view of going global and multiplatform. "I think 2011 marks for us the year we're transitioning from being a Facebook game company to a broader multiplatform social gaming company," he says. "So we're not just going to be doing Facebook games. We're going to develop onto mobile and, in the longer term, smart televisions as well." Also part of the plan is a shift to focus on those countries where Facebook isn't present or isn't the primary social network, like China, Japan and Korea. "We're looking at markets even bigger than Facebook now," says Relan. Of Facebook's 700 million users, Relan estimates Crowdstar has captured about 200 million. Yet there are, for example, 2 billion smartphone users globally to be addressed, and the company wants to aim for those too. "We're looking at big markets, and I think we need to invest in that," Relan says. The company recently hired Alex Galvagni, formerly the CTO and Global Product Development SVP at Glu Mobile, as its new head of studios. "He has the experience to grow and scale our business," Relan adds. Partnering with The9, one of the main investors in the funding round, will also help, as the companies have had a working relationship before. "If you recall, The9 was an investor in OpenFeint, and we launched OpenFeint in China with their help," says Relan. "So assume that The9 and Crowdstar will be working together to address the Chinese market." We asked Relan for his thoughts on the viewpoint among some industry-watchers that the social gaming space is over-valued, or is in a bubble cycle that will precede a steep decline. "I think that unlike previous bubbles, this time the companies' revenue and profits are very tangible," he says. "Zynga, Facebook or LinkedIn have real money flowing through them." But Relan says that while there might, in fact, be some slight overvaluation in the sector, the bigger problem is that front-runner Zynga has grown so quickly that it's created challenges. "It's hard to meet those kinds of growth goals, where you are just growing 1000 percent or whatever year over year for the next three or four years. I do see that as a problem if they don't grow into that valuation. But I don't see it collapsing; it just needs to be adjusted." Crowdstar is still "very small and young" relative to Zynga, on the other hand: "I don't see us running into a ceiling of that kind in the near future," Relan says. "We tend to double or triple our growth year over year, and that's, at our level I think, very possible to do for the next five years."