TinyCo Raises $18 Million From Andreessen Horowitz For Mobile Gaming

My, how things change. A few years ago, anyone proposing that Facebook games would turn into a wildly profitable multi-billion dollar industry would probably be met with some pretty strange looks. Yet now market-leader Zynga has a higher valuation than Electronic Arts. Some might say the gold rush has passed, and that the entrenched players are going to be impossible to beat, but now a new wave of companies has set its sights on a related, but fundamentally different genre: casual mobile gaming.

Today, a startup called TinyCo (formerly known as Brooklyn Packet) has closed an $18 million funding round led by Andreessen Horowitz, and they’re setting out to become the most successful mobile gaming company out there. It’s a lofty goal and TinyCo has some steep competition, but their thesis — that mobile gaming is about to take off in a huge way — seems right on the mark. Oh, and they now have Marc Andreessen on their board, which isn’t a bad start.

TinyCo founders Suleman Ali and Ian Spivey started working on Facebook games two years ago, focusing on games that included virtual currencies and persistent worlds (like FarmVille). Unfortunately while they learned a lot about game mechanics, none of their games got much traction.

Then in Spring 2010 the team started working on an iPhone game called Tap Resort Party — a resort sim that prompts gamers to check back in every few hours to collect their earnings and reinvest them. The game quickly took off and the TinyCo team realized they were onto something, so they began to focus exclusively on mobile gaming. Tap Resort Party has since gotten over 5 million downloads, and has hundreds of thousands of active players per day.

The company released Tap Galaxy several months later to a more tepid response, but the founders explain this was primarily because the game was just a reskinned version of Tap Resort Party. So they want back to the drawing board and cooked up an entirely new game.

In November 2010 they released their next game — a restaurant management sim called Tiny Chef. Again, they struck gold, reaching as high as the number two top grossing spot on the App Store, and over 5 million downloads overall (Tiny Chef also has hundreds of thousands of daily active players).

Which brings us to today. Spivey and Ali say that mobile gaming is about to see a huge leap, driven by a combination of the introduction of in-app payments to Android and an estimated 150 million iOS and Android devices that will ship in the next year (and those numbers are only going to grow higher). The company now has 40 employees, many of whom are veterans from the likes of Playdom and Digital Chocolate.

I asked Marc Andreessen why the fund decided to choose TinyCo as one of their big bets in mobile. The answer, he explains, has a lot to do with their technical focus.

“It’s the strength of their vision. In particular, they really have a deep product vision, though most of it isn’t public yet. They want to make a first class tech company that wants to make games. We’ve been looking at companies like this for two years, and this is the first time that we’re seeing first-class technology entrepreneurs.”

Andreessen also explained why his firm is so optimistic about mobile in general.

“There have been mobile gaming startups for 15 years. The opportunity didn’t exist before because you didn’t have real smart phones — they weren’t real computers in your pocket. It’s only in the last year or two that the opportunity has opened up. We think that opportunity is going to expand. There’s 100 million smartphones, right now — great. In three to five years there’s going to be 2 billion. Everyone in the developed world will upgrade to smart phones, and the developing world will follow in five to seven years — everyone who has a feature phone will have a smartphone. It’s going to be one of the greatest market opportunities that we’ve ever seen.”

Of course, TinyCo isn’t alone on its mission to dominate mobile gaming. Pocket Gems raised $5 million from Sequoia, and SGN is focusing on this space as well. And who can forget the established Facebook game companies like Zynga, which doubtless have their eyes on mobile as well.