Habbo hit by investor exit amid sex chat allegations

Private equity investor Balderton Capital has decided to dump its 13.5% stake in Sulake, the Finnish company behind Habbo.

According to the Financial Times, Balderton said: "As soon as we realised child safety was being jeopardised, the partners took the unanimous decision to exit."

A spokeswoman for Balderton told Media Week that it had decided to exit and resign from the board, but declined to provide further comment.

The Channel 4 News report, broadcast last night and available on the Channel 4 site, is based on the experiences of producer Rachel Seifert. She spent two months on the site posing as an 11-year-old girl.

She claimed: "The chat was very sexual, perverse, violent, pornographic, overtly sexual acts, people saying they were going to do things to others, and it was very graphic.

"Within two minutes I was being asked individually 'do you have a webcam?', 'can we chat on (instant messenger service) MSN, on Skype?'. I was also within a couple of minutes asked to strip, fully naked, and asked what I would do on a webcam."

A Sulake spokeswoman declined to answer questions by phone this morning, but Sulake chief executive Paul LaFontaine has posted a four-page message about how Habbo polices its community and invited people to contact him on Twitter (@PaulLaFo) for more information.

LaFontaine claimed Habbo is a "well moderated online community targeted at users no younger than 13-years of age".

He claimed it employs more than 225 moderators tracking some 70 million lines of conversation and its moderation and safety system was recognised as one of the safest social networks in a 2011 European Commission report.

Brands have engaged with Habbo in the past. In 2010 it struck a partnership with Coca-Cola brand Capri Sun on The Capri Sun Summer Theme Park branded room as well as a cross-promotion with MTV.

This article was first published on mediaweek.co.uk