VentureBeat

We’re going to have a veritable galaxy of virtual worlds soon. Investors put $184 million into 23 virtual world companies during the first quarter of 2008, according to Virtual Worlds Management. That may sound like a lot, but the froth in this sector is actually down from the past.

The investors include angels, venture capitalists, and media companies. In a sign that the kids market is heating up, eight of the investments, worth a combined $16 million, were in youth-oriented virtual worlds.

Mirror worlds also drew three investments worth $15 million. These worlds either try to duplicate a reality, like a luxury travel destination, or mix the real with the fantastic.

The investments were down compared to last year’s fourth quarter investment of $425 million across 15 companies. But $300 million of the fourth-quarter amount went to one company, Zenimax Media, which was more of a game-related investment than a virtual world. The game investments in this past quarter were a mixture of social networking and games.

Joey Seiler, Editor of VirtualWorldsNews.com, said the recession is hurting investment and the first quarter results show that. He noted other surveys show that confidence among Silicon Valley venture capitalists has hit a four-year low. So in this context, the virtual world fundings were still significant. Chris Sherman, executive director of Virtual Worlds Management, predicted that enterprise-related virtual worlds (such as the Unisfair virtual trade show builder we wrote about) will continue to pick up momentum.

About $100 million of the first quarter virtual world investment total was raised by 9You (a Chinese music game/virtual world) and came from Temasek Holdings. For a list of the other investments, look here.

Chinese online gaming and music site 9You has taken a whopper round of $100 million from Temasek Holdings and other institutional investors, according to PaidContent.

9You is something of a portal, offering games in every category (casual, hardcore and mobile) as well as some social networking tools and an assortment of unrelated services. It reports having over 120 million registered users, a bit under half of the country’s entire internet population.

Many US casual gaming companies have an eye on cracking the Chinese market, but by the time they get around to it, they may well need to operate through partnerships with companies like 9You.

Temasek, by the way, is the investment arm of Singapore’s government, with over $150 billion in assets. Over the years it has put money into shipping, banking and other major industries, but has recently become more interested in internet investments.

Given the investment size and the growth of traffic to 9You, it’s probable the company will aim for an IPO later this year or early in 2009. Because gaming is important in the Chinese internet market, the company may well become one of the country’s biggest internet destinations thereafter.