British startup Mindshapes has raised £3.1m in a Series A funding round to fuel its ambitions in the burgeoning market of apps for children.

The investment came from the company's five founders and unnamed angel investors. It follows the release of seven apps for iPhone and iPad since the company was founded in October 2010, including Jack and the Beanstalk, Hickory Dickory Dock and Casper Scare School.

Mindshapes has ambitions beyond individual apps, though. The company is preparing to launch two virtual worlds early in 2012: Magic Town and Language City.

The former will be accessible through an app and web browsers, and will have a focus on storytelling and picture book characters, with deals in place for brands including Elmer, Winnie the Witch and Little Princess. The latter will be browser-only, and is described as a "task-based, language learning virtual world".

Chief executive David Begg says that the new worlds are a logical extension of the principles that led him and his co-founders to create Mindshapes in the first place.

"We wanted to find a means of getting kids to engage more deeply with characters in a story-based framework for learning, giving them exactly the sort of development experiences that are critical for children that age, but very open to technology in all its formats," he says.

"We approached it from the storytelling angle. There is an enormous range of characters out there, and a fascinating set of stories for kids. So how do we apply storytelling in a more learning and developmental context?"

As we explained when we first covered Mindshapes, several of the founding team previously worked at social games publisher Playfish, which was acquired by Electronic Arts in November 2009. Other members of the team have experience at Sesame Workshop, Scholastic, HarperCollins, CBeebies, Sega and Sony – an interesting mix of children's TV, books and games that is coming together with kid-apps in 2011.

"We don't want kids to be in front of a screen for the entire day," says chief commercial officer Christian Dorffer. "We want technology to inspire them to do things that you as a parent would like them to be doing. Stimulate their imagination, get them to ask questions. It's just like a preschool teacher using storytelling to get kids to be creative. It's not just linear games or memorising things by heart."

Begg thinks that the current explosion in apps for children is a double-edged sword: it's establishing a market for these apps, but also overwhelming parents with a flood of products to choose from – many of which aren't very good at all. A problem, of course, that afflicts the wider apps market too.

Both Begg and Dorffer talk about Mindshapes' aim to get children playing and talking together around apps, as well as stepping away from the screen: "In time, more things we deliver will be oriented around linking a child's technology and screen experience with the outside world around them, as well as using the device for social play," says Begg.

With 2-3 months until launch, Begg and Dorffer are unwilling to say too much about the new virtual worlds, although they confirm that Magic Town is aimed at 2-6 year-olds, with a number of "top publishers" signed up to provide content and characters. Stories, games and other activities will all be part of it. Dorffer says that the National Literacy Trust and Book Trust are also on board as partners.

He adds that it's important that Magic Town isn't just an app, pointing out that for all the focus on iPhones and iPads from developers, they cannot be the sole platform for a storytelling platform aimed at children.

"In some ways, if you think about the kids who have the greatest need for being read to, a lot of them don't have iPads and can only be reached through different types of technologies," he says. Hence Magic Town's planned availability through web browsers, although Begg suggests that in time as cheaper tablets are launched, "they will more and more become the cheap alternative [to computers] for accessing content and technology".

He also hails the current mood of experimentation among developers and publishers making apps for children, saying it is important to focus on more than simply what will make money in the short term. Both Begg and Dorffer see brands emerging over time, though, as parents gravitate towards companies or characters that they trust to have a high quality level in their apps.

"Everybody is trying to figure out how they're going to be playing in this space, and kids love to have an emotional connection with the games they play and the characters in them," he says. "We firmly believe that brands will do well in this space, but they may not be the big classic children's brands. New brands will also emerge."

Begg points to Angry Birds and Moshi Monsters as examples of new brands that have sprung up in a short time on new platforms.

"It's a complete shake-up," he says. "We are no longer beholden to the power of the big TV and film brands. Characters and stories can evolve out of many different routes. Hopefully we'll be the initiators of some of those."