Kabam’s Pivot Pays Off; Social Gaming Company Raises $30M

In the parlance of the Silicon Valley tech community, Kabam performed a pivot more than a year ago when it changed its name and its business plan.

The move seems to have paid off. The Redwood City, Calif.-based company, which had two dozen employees a year ago and now boasts about 250, announced it raised $30 million in Series C funding to fuel its growth plans. The round, which brings Kabam‘s total funding to $39.5 million, is led by Redpoint Ventures and Intel Capital with additional funding from Canaan Partners, which seeded Kabam.

The company today operates in the massively multiplayer social gaming category, making games, such as “Kingdoms of Camelot,” that some 7 million monthly users play via Facebook. The game, according to CEO Kevin Chou, is targeted at the hardcore gaming audience–males aged 20 to 35. But Kabam wasn’t always focused on social gaming.

Two years ago, the company was known as Watercooler, which allowed fans of sports teams and TV shows to interact on social networking sites. But in late 2008, following the collapse of Lehman Brothers, ad revenue fell off the table. Because of the financial crisis, we couldn’t stay where we were, Chou told me yesterday. So he harkened back to when he was 13 and he fell in love with games, playing, and completing, the “Legend of Zelda” series in a few days on the Nintendo.

“Two years ago, we saw the Zynga was onto something with its approach to social gaming and interaction,” Chou says. However, unlike some of the casual social games from Zynga and other developers, Kabam players interact in real time in game worlds inhabited by millions worldwide.

Maha Ibrahim, general partner at Canaan Partners, told me the company, which has expanded to include studios in San Francisco, China and Germany, will also likely grow through acquisition to add more gaming engineering talent.

“Social gaming is a huge trend that can’t be ignored,” she says.