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VCs invest in alternate reality

"Perplex City" gets cash infusion to help expand online mystery puzzle game.

A British company that is pioneering a new genre of online game, widely known as alternate reality games, has secured a $3 million round of venture capital funding.

Mind Candy, a development house that operates a game called "Perplex City," said it received the funds from Index Ventures, an investor in Skype and other technology companies.

Mind Candy will use the funds to expand the scope of its current game, said Michael Smith, chief executive officer of the company. Index, led by firm partner Danny Rimer, had previously invested $1.5 million as a seed round in the company.

"We are extremely excited about this partnership and see enormous potential to build a global brand around puzzles and puzzle-solving," Smith said in a statement.

Alternate reality games are a relatively new mix of online puzzle-solving and interactive fiction that brings a community of players who typically play the role of voyeurs and participants into an unfolding mystery.

The genre's trailblazer is Seattle-based 42 Entertainment, whose founders have created sophisticated online stories and worlds to help market Steven Spielberg's "A.I." movie, Microsoft's "Halo 2" game, and the recently released "Gun" video game from Activision.

That company's latest, an ambitious gangster-western-noir saga dubbed "Last Call Poker," is still available online.

Mind Candy and "Perplex City" were created by several of the most avid players of the 42 Entertainment team's original game, called "The Beast." "Perplex City" is the first major entrant in the genre to experiment with a standalone revenue model, rather than being funded as a marketing vehicle for another project.

The Mind Candy game is offering players a $200,000 reward to help find an artifact that has been stolen from fictional Perplex City, a society in love with puzzles and brain-teasers. The company sells puzzle cards online and at game stores, but also lets players follow the unfolding story online for free.

Currently, nearly 10,000 people are listed online as participants in the portion of Mind Candy's game which involves solving the puzzles on the cards.