Mobile game maker TinyCo scores $18M from Andreessen Horowitz

When uber-investor Marc Andreessen moves into a market, you have to figure it’s hot. Today, his firm Andreessen Horowitz is investing $18 million in TinyCo, an iPhone-game publisher.

Andreessen, you may recall, cofounded Netscape, the creator of the first commercially successful Web browser. So take his word for it: Mobile gaming is hot, thanks to the popularity of smartphones such as the iPhone and tablet computers such as the iPad. While social games on Facebook have become a huge market in just a few years, many observers think that mobile gaming will be even bigger. That’s why there’s a gold rush on now by investors.

The $18 million figure is a pretty big amount for a young company such as TinyCo. TinyCo was founded by Ian Spivey and Suleman Ali, two serial entrepreneurs in their late 20s who met while they were students at the Massachusetts Institute of Technology.

Digital Chocolate, an established maker of cell phone and social games, raised $12 million earlier this week. Pocket Games raised $5 million from Sequoia Capital in December. And everyone is bullish on the mobile game market ever since Japan’s DeNA bought iPhone game maker Ngmoco for up to $403 million last year. Overall, game companies raised $1.05 billion in 2010, up 58 percent from a year earlier.

“We think that a billion-dollar company will be created in this market in the next 12 to 24 months,” Spivey said.

That’s not an insane statement. People were stunned early on when Zynga’s Mafia Wars started making $1 million in revenues a month. Now CityVille, which has 93 million monthly active users, is making far more than Mafia Wars ever did. This year, Spivey is expecting Apple to sell 50 million iPhones and iPads, while Android device sales may top 100 million. That will create a bigger and bigger market for TinyCo’s games.

One measure of how important the game market has become is that Andreessen himself, who serves on the boards of Hewlett-Packard, eBay, and Facebook, is joining TinyCo’s board.

TinyCo started as a Facebook-app company a couple of years ago. But the founders decided to switch to mobile games about seven months ago with the arrival of the iPad and the wave of growth in Android smartphones, Spivey said in an interview.

At that time, they had around six people; they have now grown to 40. TinyCo has been hiring veterans from companies such as Playdom, EA, Microsoft, Amazon, PlayFirst, Digital Chocolate and others.

The change in direction turned out to be a good move. Both Spivey and Ali studied the market and figured out that two categories that were hits on other platforms — simulations and management games — were underrepresented on smartphones. So they set about building them and two of the company’s three games have been huge hits. Together, Tap Resort Party (above, a resort simulation game) and Tiny Chef (top, a restaurant management game) have more than 10 million downloads between them. Those games were successful enough to make the company profitable. Now it is undergoing an expansion and hopes to launch 10 games this year.

That’s the great thing about the App Store, which has 50,884 games. Titles from small concerns such as TinyCo can sit alongside games from Electronic Arts on the list of top sellers. On the Internet, no one knows you’re tiny.