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Kiwi virtual world creators get $2.5m

TradeMe founder bets on social gaming

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The growing investment frenzy for anything "social" continues, with SmallWorlds attracting the eye of New Zealand entrepreneur Sam Morgan, who has tipped NZ$2.5 million into the company.

As world+dog hopes to emulate the success of Zynga's Farmville, the sector has attracted dollars from the likes of News Corporation and Disney.

Launched by Mitch Olsen and Darren Green in 2008, the Auckland-developed game has attracted 6.5 million registered players, most of which in America. In SmallWorlds, players create their own online worlds, buy and sell items and share content.

The investment will help it move into non-English-speaking market, as part of a plan to try and generate NZ$100 million by 2013.

"Online businesses like this are hugely scalable and can grow incredibly quickly while maintaining high margins. SmallWorlds has already proven its audience appeal, technology and management capability,” Morgan said.

Morgan founded New Zealand’s eBay-lookalike TradeMe in 1999. Dominating the sector in that country, it was acquired by media company Fairfax for NZ$750 million in 2006, turning Morgan into an investor in, and advisor to, Kiwi startups.

"Our next wave of multi-million dollar exporters may well be trading virtual goods, which is a real and significant global market," Morgan said.

Co-founder Olsen said although the game is free, "only a small percentage of players need to purchase premium content and virtual goods in order to create significant revenues.”

SmallWorlds currently employs 35 staff and plans to create 20 new jobs this year. Morgan, Jade Software CEO Craig Richardson and US technology investor Payman Pouladdej have recently been appointed to SmallWorlds' board. ®

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