‘Gold farming’ marketplace Itemku snaps up seed funding from 500 Startups

Earlier today, FiveJack, the maker of Indonesia-based online game item and currency marketplace Itemku, announced a seed funding round of US$225,000 from US-based venture capital firm 500 Startups. 500 Startups made the investment through its Korea-based fund 500 Kimchi and Southeast Asia fund 500 Durians.

Itemku launched in July of 2014 as a price comparison and classifieds platform, but repositioned itself the following June as a purveyor of game items and currency. According to a statement issued by FiveJack, the investment is intended specifically for the development of Itemku.

The site allows gamers in Indonesia to compare prices and trade in-game currency via an otherwise traditional marketplace web portal. Those familiar with the practice often refer to it as “gold farming,” where players hand over cold, hard, real-life cash for in-game currency.

For example, let’s say you want one million units of currency in your favorite game Clash of Clans, but you haven’t earned it in the game. With Itemku, you can circumvent the game itself, and purchase the amount from other Clash of Clans players.

For the most part, the practice known as gold farming is looked down upon and discouraged in the gaming world. According to the BBC, most online game operators expressly ban the practice of selling in-game currency for real-world cash, as it most often violates the end-user license agreement along with terms and conditions of large online games. This documentary can also help you understand a little more about gold farming.

See: Itemku wants to be Indonesia’s first marketplace for game currency

A gamer and his money are soon parted

Regardless of controversy, however, 500 Startups has pushed ahead with the investment. “Indonesia’s esports market is similar to how China and Korea’s markets were in [their] earlier years,” says Tim Chae, general partner of 500 Kimchi. “Itemku’s growth in the past few months speaks for themselves.”

Indeed, Itemku claims hefty growth. CEO Denis Kim says one seller on Itemku is already raking in over Rp 20 million (US$1,442) per month simply by trading items he gains during his regular gameplay – a monthly income that Kim claims is “comparable to a senior managerial position in Indonesia.” The team says, in certain cases, users on Itemku have purchased single in-game items for around Rp 3 million (US$216) a piece.

In the past, Virdie Haqmal, product manager at Itemku told Tech in Asia that a similar company called Itemmania in Korea currently facilitates around US$1 billion in trading per year and collects a profit of roughly three percent. Kim today says Indonesia has a strikingly similar demand, and gamers will soon likely transact at the same level in five years’ time.

See: Indonesian mobile game studio Touchten pockets funding from Gree and 500 Startups

500 Startups shoots from the hip