Flash game site Newgrounds raises $17.5 million in venture capital

Tom Paine


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Newgrounds, the famous Glenside-based flash game and movie site with a worldwide audience, has raised $17.5 million in venture capital, according to third quarter numbers released in the latest MoneyTree report from PricewaterhouseCoopers and the National Venture Capital Association using data from Thomson Reuters.

Alexa.com ranks Newgrounds 2,086 among sites globally and 1,271 in the US. Time Magazine rated Newgrounds as one of its top 50 websites in 2010. It was founded on July 6, 1995 by Tom Fulp, who still runs the site and has been the principal owner. Fulp was raised in Perkasie and attended (and eventually graduated from) Drexel. Newgrounds relies heavily on user-generated content, although it does produce content (some of it very successful) inhouse.

Newground's finances have been a mystery to most people. Advertising is said to be the primary source, and Newgrounds has a program that enables content contributors to get a share of ad dollars generated by their submissions. Newgrounds also has a merchandise store. Whether Newgrounds has generated significant revenue from content it has produced inhouse is unclear, although presumably there is some value to its intellectual property. (Actually, much of its inhouse content is produced through a separate entity co-owned by Fulp named The Behemoth.)

Recently, some users had suggested that Newgrounds was losing ground to competitive sites, and there had been more discussion on the site about financing alternatives. In April of this year Fulp posted this on Newgrounds, raising the question to his community about whether he should take VC money. In late September, Fulp introduced a premium subscription model that offered users some enhancement for $25 per year, leading some bloggers to wonder whether Newgrounds was in trouble financially.

I'm not sure who the investor(s) are, since the VC firm listed in the report invests primarily in the healthcare space so that doesn't seem correct (there are often discrepancies in the initial release of data).



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