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September 26, 2006
Why Rebtel Raised So Much VC
The short answer probably would be, because it could. But we asked Index Ventures, which invested alongside Benchmark Capital's European fund in Rebtel's $20M A round, why a company offering global mobile calls at local rates, a service that has already launched with a system that routes much of its cellular voice service over IP networks, needed such a large first round.
Rebtel's Founders Hjalmar Winbladh (l) and Jonas Lindroth (r)
Did the size mean that the VCs took a big majority stake? They are not saying.
Does it need a lot of capital to market the service? We could understand FON, another Index Ventures investment, needing to raise a double digit million first round, afterall it is subsidizing its Wifi routers at €15 a pop. But as far as we know, Rebtel doesn't have that kind of expense, beyond the cost of buying a bunch of phone numbers in each of the countries in which it's active.
So we asked Index's Danny Rimer what's up. He answered:
It's a globally operating company and we want to grow into multiple territories quickly. And we want the management team to have enough capital to focus on the opportunity, and not have to go out in six to twelve months to raise another round of financing.
Rimer also said that some of the capital would be used to develop value-added services that will make using Rebtel more attractive.
We've been eyeing Rebtel since Innovate Europe earlier this year when vpod.tv’s Rodrigo Sepulveda Schulz got
Chris Shipley, the organizer of the event, on video saying that the hottest company this year was Rebtel.
We figure that Benchmark and Index are counting on Rebtel’s founders, Hjalmar Winbladh and Jonas Lindroth, having a greater risk-taking appetite with Rebtel than the norm.
The founders might be eager to develop a longer lasting success than with an earlier venture, Sendit. The two co-founded in 1994 the mobile messaging software firm and took it public. It was then acquired by Microsoft Corp. in 1999, which did not do much with it afterwards.
In the meantime, Windbladh was involved with StartupFactory, a Swedish early stage venture firm that was active between 2000 and 2003 that backed some interesting early stage companies (it was acquired by its cornerstone LP, Investor AB, in 2004).
Rebtel's service is going to be a boon to mobilephone users that travel or that have people they want to communicate with frequently located abroad and don't want to go the WiFi Voip route.
It's complicated compared to state of the art PC-to-PC calling but the high rates charged for mobile international calls will probably give users a lot of motivation to go through the contortions.
The only real hurdle we see to this enjoying rapid take up is that users have have to pay to use it up front. Part of Skype's popularity, for example, was because it was free and you could use it immediately without digging out the credit card or tapping the PayPal account.
There are now several well-funded startups poised to make cellphone use cheaper, with a few more in the pipeline - like Swiss startup Vipera, which is currently focusing on making data service cheaper, and it has not raised venture capital yet.
Read - Rebtel's Mobile Calls At Local Rates (alarm:clock)
Read - Rebtel Dials UP $20M (press release)
Posted on September 26, 2006 12:04 PM | Posted to News And Updates | Venture Capital | Wireless | Permalink
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