Smith & Tinker Raises $29 Million To Try And Be The Next Webkinz

Seattle-based gaming company Smith & Tinker is hoping that it can turn a combination of an online battle game and related electronic toys into a franchise that’s just as lucrative as Webkinz (which is bringing in a reported $750 million per year, per SAI).
The Seattle-based company recently launched Nanovor, a free online game that lets kids battle fantasy creatures — also called Nanovors — but the WSJ reports that it will start selling the toys, which retail for about $50, in stores this October. And the revenue stream doesn’t stop there; kids will also be able to build up their creature army with add-on packs they can buy with virtual currency called Nanocash.
Smith & Tinker’s comprehensive business model has helped it raise $29 million in funding since its launch in 2007. Its most recent cash infusion (amount undisclosed) came in July; investors included original backer Alsop Louie Partners, as well as DCM, Foundry Group, Leo Capital Holdings and Paul Allen’s Vulcan Capital. The company will promote Nanovor with TV ads and a web series.
The hybrid online/offline game strategy has worked well for Ganz (parent company of Webkinz), but also for Nintendo, which by most accounts, has raked in well over $15 billion for its Pokemon franchise since 1996. Meanwhile, Disney (NYSE: DIS) paid $350 million for a slice of the business when it bought out Club Penguin in 2007.
That’s not to say that Smith & Tinker’s Nanovor franchise is guaranteed to be a success. Ganz faced fallout when it tried to up the Webkinz revenue stream by running ads in its virtual world, and Disney’s Club Penguin deal hasn’t proven to be as lucrative as the media company forecasted. Smith & Tinker will also have to overcome the challenge of getting parents to shell out $50 for (another) electronic toy in the midst of a recession.