Widget-maker RockYou raises $35M, claims larger reach than competitor Slide

RockYou, the Silicon Valley widget company that lets millions of people post slide-shows on Web sites and play games on platforms like Facebook, has raised $35 million more in a third round of funding.

VentureBeat confirmed it over the weekend with chief executive Lance Tokuda. The company will issue a press release Monday.

Doll Capital Management led the round, providing $30 million. The remainder $5 million was provided by existing investors, Sequoia, Partech and Lightspeed. Tokuda said the company may raise more money later, but wouldn’t elaborate. The company has now raised about $49 million in total.

Tokuda said the company raised the cash to keep expanding. The round follows the $50 million round of cash raised recently by competitor Slide at a whopping $500 million valuation. I’m told RockYou raised this round of money at a valuation lower than Slide’s, but I’m not sure how much lower. RockYou had set out to raise money at a valuation of $400 million, though VentureBeat reported earlier that it was having trouble doing so on clean terms.

Rockyou is competing neck and neck with Slide. RockYou may have a slight edge, though: RockYou’s reach stands at 87.5 million users a month, compared to Slide’s 63.7 million, according to traffic measurement company Quantcast.

That Slide was able to raise money at a higher valuation than Rockyou may come down to two facts: 1) timing; economic woes have set in, and made investors a little more sober, and RockYou was slower to raise money; and 2) Slide’s founder Max Levchin is a veteran entrepreneur, having co-founded PayPal, another very successful company. RockYou’s founders (Tokuda pictured left, co-founder Jia Shen on right), by contrast, are on their first company.

I should note that RockYou’s funding included the $1 million invested barely a week ago (reported by VentureBeat). That $1 million was a “bridge” financing to tide the company over until the larger round could be completed, said David Chao partner of DCM. RockYou needed the $1 million urgently to do an unspecified deal, Chao said.

Chao said it was clear from RockYou’s growth in page views, monthly unique users and overall Internet reach that Rockyou may become a top-ten Internet property globally (at least in terms of reach).

RockYou has been building an ad network to let advertisers target users of RockYou’s popular applications on Facebook and other social networks. The Quantcast numbers count traffic to pages that contain widgets where RockYou has the ability to insert advertising.

Chao said that advertising dollars flowing into social network sites have been small so far, but they’re likely to grow over time as advertisers get used to the medium. Already RockYou is making “double-digit” millions of dollars in revenues, he said, referring to this year’s run-rate. Contextual advertising will become popular on Rockyou, as advertisers find that they can target certain demographics, for example the different genders and age groups of users that play RockYou’s various games, Chao said.

Chao said RockYou would likely to build more complex applications over time, which may mean more sophisticated audiences and thus more lucrative advertising.

Tokuda said the company is moving to Redwood City, Calif., this month, from San Mateo, Calif.