IBM has been working inside Second Life for at least a year to bring real-world business and social operations to the virtual world. Last month the company held a virtual “block party” inside Second Life as part of its Greater IBM program to reach out to IBM alums scattered across the globe. IBM, along with China’s Palace Museum, is also developing a virtual version of the Forbidden City to help virtual denizens experience Chinese culture.

With the $10 million, IBM eventually wants to develop a private 3D world that employees can use to discuss private business information. Several IBM-owned islands inside are already private. According to the Reuters news bureau inside Second Life, there are more than 230 IBM employees regularly spending time in the virtual world.

IBM calls its operations in 3D virtual worlds “v-business” (v for virtual) as opposed to “e-business.”