Investors Punish Online Scam Trafficker with $15 Million
Just as the public was learning that a huge chunk of Zynga's social gaming revenue came from scammy "quizzes" and "special offers," Silicon Valley's most prestigious venture capitalists rewarded the company with $15 million. Hey, that's just how VC's roll.
TechCrunch publisher Mike Arrington began writing his high-profile posts exposing the misleading ads carried by Zynga on October 31. Four days later, according to documents filed with the SEC yesterday, Zynga began issuing shares as part of its latest $15 million round of financing that included firms like the gold-standard Silicon Valley shop Kleiner Perkins Caufield & Byers (past investments: Google, Amazon, Netscape, etc.), as PaidContent points out.
Of course, it took until Nov. 6 for video to emerge of Zynga CEO Mark Pincus admitting that some of the ads his company ran were "horrible." But we'd venture to guess that Zynga's investors, now into the startup for at least $54 million, would still have gone forward with their investment even that video emerged earlier. They care no more about Zynga's murky origins than they did about those of Zynga's chief clients like MySpace (born from a spam and spyware operation) and Facebook (which paid $65 million to settle claims it was founded on stolen technology). In Silicon Valley, the sins of the past are regularly washed away by infinite promise of the all-important future.