CrowdStar and YouWeb launch $10M fund to invest in mobile developers

CrowdStar and YouWeb have launched a $10 million fund to invest in mobile social game developers. The fund is an acknowledgement that game maker CrowdStar can’t make all of the best games itself.

It is also yet another sign that winning over game developers is critical for publishers in the land grab for market share on fast-growing mobile platforms.

The two companies have the same roots and are natural partners, said Peter Relan, chief executive of CrowdStar and chairman of YouWeb, in an interview. YouWeb is an incubator that spawned CrowdStar and other hot startups of the mobile-social era, including Sibblingz, iSwifter and OpenFeint.

In that respect, Burlingame, Calif.-based YouWeb is good at finding entrepreneurs and backing them, Relan said. To handle this new StarFund, Relan is assigning a key (unannounced) lieutenant to focus on finding good mobile game developers.

“We want games and more of them,” Relan said. “We know we don’t have all the ideas.”

CrowdStar recently raised $23 million from Intel Capital and Time Warner investments. That allows CrowdStar to contribute both money and game production expertise to the partnership. But Relan, who spoke in a fireside chat at our GamesBeat 2011 conference on Wednesday, said that CrowdStar had to raise that money because it is accelerating its global expansion and has ambitions to be big on Facebook, on mobile, and in Asia. Of those major markets, Facebook is likely to be the smallest business opportunity, Relan said.

Social games on Facebook took off like a rocket and CrowdStar rode that wave. But now the company has launched its first mobile game, Top Girl, aimed at young females. The game simulates a modeling career and was created by CrowdStar’s new mobile studio, headed by Blair Hamilton. The game took off and got to the No. 1 spot on Apple’s App Store, acquiring more than 1 million downloads in 10 days.

CrowdStar and YouWeb will have competition. Other companies that have set up funds for developers include TinyCo, OpenFeint, Flurry, Scoreloop and Tapjoy.

Relan said that CrowdStar (which has 25 million monthly active users on Facebook) knows how to make social games on Facebook, based on metrics and analyzing user feedback. It can apply that expertise to mobile and help young mobile game developers to make their games in addition to giving them money. With the hit game Top Girl, CrowdStar also has distribution power on mobile, Relan said. CrowdStar can launch new mobile titles in the future that it can cross-promote to its new female demographic on mobile phones.

Relan said the fund will invest up to $250,000 in initial funding for developers. CrowdStar will offer marketing and analytics resources to help developers and enable them to get into global markets. CrowdStar may also acquire developers on a selective basis. On CrowdStar’s side, founder Suren Markosian will help find the new mobile developers. Hamilton said that great teams and products can still get to the top in mobile social games.

“Mobile gaming is a very young market and there is a lot of creativity out there,” Relan said. “Developers have great ideas, but they may not have the game design and metrics expertise that we do as a publisher.”

Relan said that one or two deals are already in place.