Virtually anything with the word virtual in it seems poised for funding these days. Both the blockbuster IPO of VMware Inc. and the $500 million acquisition of XenSource Inc. by Citrix Systems Inc. show virtualization has legs. The more than $500 million going into virtualization companies so far this year ($370 million to VMware before the offering) suggests this week's news may be only the tip of the iceberg.

Virtual worlds have also been attracting plenty of real VC capital. The $700 million acquisition of Club Penguin by the Walt Disney Co. and all the money "World of Warcraft" is bringing in to Vivendi SA (nearly $287 million in the second quarter) has venture firms excited about investing in virtual worlds. Doppelganger Inc. announced an $11 million financing to support the recent launch of its online virtual world — vSide — which will be three times larger than its Music Lounge predecessor.

Other venture-backed virtual worlds include: Linden Research Inc., the San Francisco-based operator of Second Life with $30 million in funding; There.com with more than $33 million; Helsinki-based Sulake Corp. Oy with more than $26 million; and Multiverse Network Inc. with $4.75 million.

Linden Lab is backed by Globespan Capital Partners, Benchmark Capital, Catamount Ventures, Omidyar Network and Jeff Bezos. There.com received capital from Sutter Hill Ventures, angel investors and employees. 3i Group plc and Benchmark Capital are stakeholders in Sulake, and Sterling Stamos Capital Management provided money to Multiverse Network.

Advertisers and media companies have been sure to make their presence felt on social networks and video games, which have been assaulting the time consumers spend in front of their televisions, and with immersive environments, virtual worlds could be one of their biggest opportunities on the Internet. The game-changing deals and the explosion of new media will be two of the top issues discussed at Tech Confidential's Convergence 2.0 conference Sept. 17. —George White   

See The Deal's Aug. 15 story on Xensource
See The Deal's Aug. 14 story on Doppelganger
See The Deal's Aug. 1 story on Club Pequin
See Tech Confidential's Aug. 3 post on Multiverse
See Convergence 2.0 conference

Tags: software, acquisition, m&a, mergers, vc, venture+capital