Virtual Currency Exchange First Meta Closes $466,000 Funding Round

By Jon Matonis
Forbes
Tuesday, April 10, 2012

http://www.forbes.com/sites/jonmatonis/2012/04/10/virtual-currency-exchange-first-meta-closes-466000-funding-round/

In a little-discussed announcement, First Meta took in nearly half-a-million dollars for the expansion of its multi-world virtual currency exchange. Singapore-based First Meta is unique in that they have consistently provided a two-way exchange service for virtual currencies that typically only see one-way activity. Why is this significant? For starters, it gives individuals the opportunity to cash out or monetize their virtual world activities just as I outlined in my previous article Virtual Currencies and Roach Motels. When it comes to Linden Dollars, IMVU Credits, Frenzoo Gold Coins, and other currencies, it is this two-way convertibility and getting the most out of your virtual assets that make the team at First Meta stand out.

The investment announced on March 29th came from Silicon Valley business accelerator Plug and Play Tech Center and Singapore’s National Research Foundation. The new capital will be used to build the next generation of its virtual goods and currency exchange and expand support to other platforms. First Meta was founded in February 2007 by Douglas Abrams and Aileen Sim who then had their early prominent business success in Second Life with MetaCard and virtual ATMs. It is important to note that the co-founders also have a background in banking, finance, and venture capital which could prove valuable as virtual exchanges encroach upon their more traditional trading house brethren.

Online virtual currency trading has close similarities to online forex trading so obviously it is a natural progression for the nonpolitical digital currencies. According to new CEO Autumn Radtke, "Consumers are being bombarded with virtual currency today like we’ve never seen before. As gaming becomes more mainstream so will secondary trading. We’re here to help the new generation of game companies and currency issuers participate in revenue and avoid the black market fraud problems associated with unsanctioned trading."

Unlike most third-party dealers of game currencies and virtual currency platforms, First Meta emphasizes the potential for publishers and game developers to open up their proprietary currency to player-2-player trading which gives users the much-desired liquidity and also introduces the currency to new users thereby exploiting the inherent viral nature of a currency. Citing new revenue streams for their partners, they claim to have the most robust player-2-player virtual asset trading platform in the industry. As they say: "Why let someone else profit from your hard work?"

Trades at First Meta may occur between two different virtual currencies or between the virtual currency and the US Dollar or Euro. This highlights what I believe is a growing trend for virtual world environments and MMO gaming -- namely the ability for participants to extract digital value from the virtual experience and convert it into real-world money.

Expected to be released on May 15th, Blizzard's Diablo III takes this value extraction to the extreme with their controversial real money auction house. Apparently, so much was at stake regarding the real currency trade that South Korean officials even persuaded Blizzard to remove the auction house feature from the local market version. Moreover, gold farmers are reportedly stunned as GamesRadar's Tyler Nagata observes:

"Traditionally, the black market for in-game items has been the elephant in the room that game developers just don’t talk about. That’s why the real money auction house for Diablo III marks a huge shift for how game studios handle player driven economies in online games. By taking the cash-for-item trades away from traditionally sketchy gold farmer sites and putting it under the official banner of its Battle.net service, third-party gold farming businesses and services may become a thing of the past if more online games adopt a similar business model to Blizzard’s moving forward."

We can expect more in the way of these types of strategic moves as virtual worlds collide and the twin mega-trends of grid portability and real money trading (RMT) accelerate. Virtual currency exchanges like First Meta will be there to provide trading liquidity and to expand the overall pie.