Virtual Worlds Management Report: Over $184 million Invested in 23 Virtual Worlds-Related Companies in Q1 2008

Virtual Worlds Management (publisher of VirtualWorldsNews.com) released a new report today rounding up the investment from Q1 2008. $184,180,000 was invested in 23 virtual worlds-related companies throughout the first quarter (complete list here) with participation from many more VC firms and angel investors. As we've already noted, the youth market is heating up, and the investments show the same theme: 8 investments were made in youth-oriented virtual worlds for a total of over $16 million. Mirror worlds and mixed realities also saw a significant, though more concentrated, interest with three investments totaling over $15 million. 

The total figure may seem anemic compared to Q4 of 2007's $425 million spread across 15 companies, but there are several things worth keeping in mind for any comparison.

$300 million of that period went to Zenimax Media, which we acknowledged might be considered more part of the game industry than the virtual worlds industry. Q1's figures still includes some game-related investments, but by and large this figure represents money flowing into companies aimed at more social than game-based interaction, business use, and the creation of mixed realities.

Likewise, the recession is hitting investors. Q1 represents a 4-year low in confidence for Silicon Valley venture capitalists as well as  a decrease in investment for 11 of 16 industries tracked by PricewaterhouseCoopers and the National Venture Capital Association.

At the beginning of the year, though, while JP Morgan was reluctant to advise any general investment in virtual worlds, it remained very bullish on kids worlds, predicting "rapid growth" for 2008. My personal bet is that mirror worlds will see  a lead-in for that growth later this year and into 2009.

Regardless of a slowdown, the industry is seeing more small investments across the board. With no acquisitions on the board, that could be a sign of current development and  future growth. Numedeon, for example, took a $1 million investment this quarter to launch a new virtual world in Spain, but also announced plans to acquire another virtual world over the next year.

You can view the full list at http://www.virtualworldsmanagement.com/2008/q1.html