Zynga Raises $180 Million from Digital Sky, Others

(Reuters) – Investors including Russia’s Digital Sky Technologies, which also holds a stake in Facebook, have bought about $180 million of the securities of social gaming company Zynga.

Privately held Zynga makes popular games for social networks like Facebook and MySpace and then profits by selling add-on tools. The fish-raising game FishVille, for example, lets players purchase virtual food and goods with game cash bought with real-world dollars.

Zynga generates 90 percent of its revenue by selling those people “virtual goods” at anywhere from $1 to $20, with most priced from $5 to $10, it has said.

The company said it would use part of the investment to fuel its growth and the rest to facilitate liquidity for employees and investors.

Digital Sky, an Internet investment group, is making the majority of the new investment, followed by Andreessen Horowitz and Tiger Global as new investors, and Institutional Ventures Partners, a current investor that has added to its position in the company.

Zynga’s other key investors include Kleiner Perkins Caufield & Byers, Union Square Ventures, Foundry Group and Avalon Ventures. As a passive investor, Digital Sky will not hold a seat or have observer rights on Zynga’s board.

In July, Digital Sky said it would pay $14.77 a share for Facebook common stock, boosting its stake to as much as 3.5 percent.

Zynga has more than 230 million monthly active users playing its games, which include FarmVille, Cafe World, Zynga Poker, Mafia Wars and PetVille. (Reporting by S. John Tilak in Bangalore; Editing by Lisa Von Ahn)