Machine Zone, a gaming startup based in Palo Alto, Calif., is in the midst of closing a large round of funding which values it at $3 billion or more, according to sources familiar with the situation.
The company, which develops elaborate multi-player games for mobile phones, has annual revenue of around $500 million, the sources said. Machine Zone earns revenue with a freemium model, selling in-app purchases to its gamers. It wasn’t clear which venture firm will lead the round. Andreessen Horowitz was interested but is understood to be no longer involved in the process.
Machine Zone previously raised $13.3 million from Anthos Capital, Baseline Ventures, and Menlo Ventures. The company participated in Y Combinator, the well-known seed accelerator, in 2008. At the time it was involved in Y Combinator, it was a social network plug-in called Addmired. The company evolved into Machine Zone, which released multi-player mobile games (or MMOs) including Game Of War and Original Gangstaz.
Machine Zone did not respond to requests for comment. News of the funding round was first reported by the Wall Street Journal’s Digits blog.