Riot Games, the games developer launched in 2006 that created the League of Legends role-playing game, announced it raised $8 million in a second round today.
Participants in the round included previous investors Benchmark Capital and FirstMark Capital, as well as new investor Tencent Holdings, a Chinese Internet company.
Tencent is an interesting strategic partner for Riot Games since both rely primarily on virtual goods to support free services, not advertising. In the current downturn companies with sizable virtual goods revenue streams have fared well while pure-play ad companies have struggled.
Riot Games is in the midst of developing an online gaming platform, which is likely what today’s funding will underwrite. Tencent could lend its expertise to anything from virtual goods strategy to online marketing in addition to bringing Riot’s online games to China across its massive reach. The company has already licensed League of Legends for release in China, which is scheduled for 2010.
Tencent runs one of the largest Internet portals in China, QQ.com. The company makes most of its money from the sale of virtual goods across its platform of portals, instant messenging applications, social networks, and games. Users can buy anything from pets, clothing, to wallpaper. And they’ve been buying a lot of them – over $700 million of them alone last quarter.