Kevin Chou Builds Social Gaming Kingdom

Kevin Chou is on track to build Kabam into an online social gaming empire.

Kevin Chou, CEO of social gaming company Kabam, knows that a gamer who has devoted hundreds of hours to build up his domain will do almost anything to grow it — or to avoid being sacked by an attacker — including whipping out his (or his parents’) credit card to buy “gems” with which to buy training for his knights, divine inspiration or even teleportation to whisk his domain away from a desperate predicament.

Kabam has 25 million such gamers spending billions of hours on its massively multiplayer social games (MMSG) like Kingdoms of Camelot, the first strategy game to achieve success on Facebook. Kabam’s games are free to play, but they generate real dollars from selling virtual currency to addicted players.

Eyeing an online gaming market that spent $9.3 bil. on virtual objects last year, venture capitalists have already pumped $125 million into Kabam to finance developers, acquisitions of other game startups and fund expansion into Asia and Germany. The $85 million in financing it raised from Google Ventures and Pinnacle Ventures in May gives Kabam an implied valuation of $500 million.

The industry has been taking its cues from leader Zynga which is believed to be profitable with about $600 million in 2010 revenues. It is now slated for a November IPO to raise $1 billion at an implied market valuation of between $11 and $20 billion. The latter figure is about the projected size of the entire MMO (massively-multiplayer online) game industry by 2014.

Kabam was originally founded under the name Watercooler by Kevin Chou, Michael Li, Holly Liu and Wayne Chan to build apps for entertainment and sports communities that claimed 60 million users before efforts were shifted to online game development. In October 2009 Kabam attracted $5.5 million in Series B funding from Betfair, the world’s largest Internet betting exchange, and Canaan Partners, which had participated in the startup’s Series A funding in 2007. In October 2010 Kabam acquired WonderHill, expanding its total work force to 200 employees in its offices in San Francisco, Redwood City, Beijing and Saarbruecken, Germany.

Before co-founding Kabam Chou racked up experience at the venture capital firm Canaan Partners by working with 14 consumer technology and online media companies. Before that Chou advised tech firms on M&A and corporate finance as part of Deutsche Bank’s investment banking practice. Chou graduated magna cum laude and Phi Beta Kappa from UC Berkeley with a BS in business administration.