Economic downturn drives merger of teen sites Stardoll and Piczo

Girl teen-site Stardoll, backed by Sequoia Capital and Index Ventures, is acquiring Piczo, a social networking site that focuses on teen users. The amount is undisclosed, but the transaction was a mix of cash and equity.

According to Stardoll CEO Mattias Miksche, who is based in Stockholm, Sweden, the acquisition was driven by an apparent interest by Stardoll’s users to express themselves in more ways, including through publishing. It didn’t hurt that the economic downturn means that assets such as Piczo are coming at a lower price.

Swedish-based Stardoll is a site where young girls (94 percent of the 27 million members are girls) can dress up virtual dolls, create on-line sites, design and sell their own virtual clothing and access information on their favorite celebrities.

Stardoll’s median user age is 15 years, and has 12 million unique visitors per month. Stardoll was conceived after Swedish designer Liisa, who was interested in paper dolls, created a personal homepage for dressing up dolls. She turned it into a business in 2004. San Francisco-based Piczo, started in 2004, has 30 million members and 7 million unique visitors per month.

Piczo will be operated from Stardoll’s Stockholm headquarters. Notably, the only Piczo employee who will move to Stardoll is a European sales director. Stardoll’s Miksche (pictured left in all of his avatar glory) claims that Stardoll’s staff of 80 can run additional sites. The company is also re-launching the original Stardoll concept by offering simpler doll dress-up for younger users — so called ‘tweens’ — under the brand PaperdollHeaven.com.