Rumors about a massive valuation of Second Life have been floating around Silicon Valley for months. The original rumors said the company raised a new round of financing at a valuation of somewhere between $500 million and $1 billion. When I asked the company about it over the summer they said, on the record, that they had not raised new money, but declined to comment further.
Another rumor speculated that one of the shareholders of Second Life had sold part of their stake in the company to a hedge fund or other private equity investor. This rumor had legs – and we were able to confirm that Catamount Ventures, one of the first investors in Second Life (their original investment was in 2000) did in fact sell part of their stake.
Jed Smith, the Catamount Managing Director who sits on the board of Second Life’s parent company, Linden Labs, confirmed today that they did sell part of their holdings – 10% – to a third party eight months ago. But he would not comment on the price of the sale. A source with knowledge of the company has said it was well above half a billion, but declined to name a specific price.