Dumb buisness said Rosedale.

A woman who is making a million dollars a year selling virtual clothes? Successful businesses buying and selling real (or unreal) estate? A couple who divorced in real life because she came downstairs to find him watching his on-screen alter ego having sex with someone else? A crowd of avatars storming a virtual bank after they'd put their real money into phony, virtual accounts, only to find they'd been scammed? Second Life was a very difficult proposition to bring to market, he says, "a really dumb idea". What makes it interesting to its users - the power to do anything you want to do - was the major problem for investors.

The money men wanted it to have a purpose, be more like a computer game, where players go from a designated start point and move through worlds created for them by programmers, overcoming a series of challenges, until they reach a definite conclusion. "It was a problem right from the get-go," says Rosedale. "I was a respected person in that market, Real Networks was a fantastic superstar on the Internet. But still it was not a fund able idea from the beginning," he says.This proved to be the "eureka" moment in the business' development because for all the stories about avatars and online divorces, Second Life is about business.

The virtual simulation is home to thousands of entrepreneurs selling things ranging from clothes, to office buildings, to body parts. It even has its own currency, the Linden dollar, which can be exchanged for real money at a current rate of €1 to 343 Linden dollars. "If you are building a completely new category and have an unproven idea, it is difficult to raise venture capital. For a lot of new ideas, it is pretty much impossible," says Rosedale. "It's the companies that are operating at a narrow loss with a revenue generating product that is selling into a marketplace where there is a risk of a downturn that are in big trouble, where they are trying to raise their 'b' and 'c' rounds. That's the picture we're seeing around our category - the virtual world category".However, in January last year, the real world impinged on its virtual imitator when there was a run on the banks in Second Life, creating a bizarre debate in cyberspace around the need for greater regulation. These virtual banks were operated by other players, who enticed deposits by offering attractive interest rates. They then used depositors' money for unsuccessful land and gambling deals. A report in the Wall Street Journal suggested the losses incurred by some of the 12 million or so Second Life users amounted to $750,000 of real money. "Everyone thinks that because you're losing play money, it excuses everything, but it's convertible to real money," said one user. The suspicion remains that users of Second Life ought to get a real one. One logger wrote: "I am amazed at the level of intellect of the people that put real dollars into an imaginary world, expecting imaginary returns. The people that play these games really should take their real money and go on a date".