On Monday, the teen-targeting virtual world Gaia Online announced it has managed to raise $11 million after a Series C funding round conducted by Institutional Venture Partners. The entire sum now adds up to about $32 million; among the other investors we find Redpoint Ventures, Time Warner and Benchmark Capital.

Gaia Online is currently one of the most popular virtual communities with about five million visitors every month; its members can socialize, play a wide range of games and buy numerous virtual items.

Norm Fogelsong, a General Partner with Institutional Venture Partners, described Gaia Online as "one of the most exciting companies in the online social community space." He considered his involvement with such a competent management team as that of Gaia to be a privilege.

Craig Sherman, Gaia CEO, said the funds are to be used for the further development of the website. One of the upcoming additions consists in a free Flash-based massively multiplayer online game (MMO), scheduled for release this very summer.

The quality of the online environment must be continuously improved, as there are other companies out there offering similar services. It is estimated that by 2011, the virtual world audience will more than double, thus reaching as much as twenty million members. In 2007, the company brought Stanford University professor Michael Boskin aboard, as chief economist.

Among the competitors, we find Teen Second Life, Habbo Hotel and Club Penguin. Last year, Club Penguin was acquired by Disney for a whopping $700 million, so it’s quite obvious serious effort is now being put into its development.