While Sequoia was busy investing $4.5 million on Thursday in Texas-based online video company Challenge Online Games, Riot Games, another video game company headquartered in Los Angeles, was raising $7 million from Benchmark and FirstMark Capital.

Riot, the brainchild of Brandon Beck, 26, and Marc Merrill, 27, president and chief marketing officer, respectively, focuses on developing online titles for consoles and PCs.

Messrs. Beck and Merrill will use the money to develop the company’s first title, a "battle arena multiplayer experience set in a beautifully stylized and imaginative world,” Riot said in the statement.

Microsoft’s Xbox Live has proven wildly popular among online gamers. Riot hopes to piggyback on the strategy, which allows subscribers to play online games with or against other gamers around the world.

“The best games are those with strong online communities, and we are committed to establishing deep relationships with our players,” Riot said.

Gaming industry veteran Mitch Lasky, a partner at Benchmark, will join Riot's board, as well as Rick Heitzmann, a partner at FirstMark Capital.

Benchmark’s portfolio includes high-profile startups such as Second Life, Tellme, Yelp, and Zillow, and public companies such as eBay, Juniper Networks, and Red Hat. The firm manages nearly $2.8 billion in venture capital.