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FON with $21.7 million round

Filed in archive Venture Capital by tj on February 05, 2006

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Well not long ago I was musing about Fon as the new Skype and apparently someone at Skype wanted to have a piece of the action:

"FON a wireless services company started by maverick entrepreneur Martin Varsavsky has just raised $21.7 million from Google, Skype, and Sequoia Capital. The cash infusion has been led by Index Ventures, the same company that had also backed Skype.

The company also announced that Danny Rimer (Index Ventures), Mike Volpi (Cisco) and Niklas Zennström (Skype) joined the board. Existing board members include Martin Varsavsky, FON CEO, and Antonio Fuentes, FON CFO. Danny Rimer, general partner at Index Ventures says, "In the same way that Skype filled a communications need, we believe that FON fills the need that people have of people getting connected to the Internet anywhere they go. Martin has created an elegant technology solution coupled with a highly viral community that could have the business impact on the broadband market that Skype has had on Internet communications."
Fon has put the money to use already and sells routers with integrated FON. No hassle with the Linksys configuration anymore:

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""Now we have to the money and we will sell pre-configured routers for $25, so it will be a plug-and-play router and you can quickly become a Fonero," he says. He says the company is going to make it easier for others to tweak their routers. In addition, he acknowledged that ISPs were going to be tricky, and he is working with about ten of them to figure out the details. Up until all issues are resolved, the "sharing"is the only option for users, and FoN is staying away from the "billing etc."
I'm really impressed - Skype and Google are not the usual investors and getting their backing across the usual fault lines in Silicon Valley is a wonderful achievement. If all the investors also invest their heart besides their money in FON, Fon will soon be the largest global telco.

Thanks Scott for the hint!##Update: The story is out for some hours only and there is already a global coverage on it - wow:

- Martin Varsavsky's blog
"I had never been to Silicon Valley until FON came about. Showing up from Spain with a business plan in my pocket and getting the support of two of the largest internet companies in the world in less than one month made me realize how it is that American dominates the internet. It´s all about willing to take risks."
- SiliconBeat:

"For Google and Skype, the incentive is clear: It allows people to more frequently use applications like the Skype phone service or Google Maps and Google Talk, because they will be able to access them on the go, on a variety of devices."
- Glenn Fleishmann at WifiNetNews
"And shouldn't municipal-scale networks with limited free access kind of distort the Fon model? Why use Fon when you can get 300 Kbps for fee (Google's bid for San Francisco) or two hours a day for free (many other cities)? If Google is as successful in building a business model for ISPs to run municipal wireless networks, advertising-supported service-such as what MetroFi now offers in three Bay Area cities-seems to wipe the floor with Fon."
- ZDNet Blogs
"To illustrate, thought I would show you some Fon WiFi coverage maps. Some of the coverage is thin, but with $21 mil and more to come, that won't last for long.

First, New York:
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- The New York Times:

"The stumbling block for such schemes is that many Internet service providers prohibit the reuse of network connections. But Mr. Varsavsky said that Fon had already succeeded in interesting European Internet service providers in revenue-sharing arrangements. He also said that the company planned to approach major United States Internet providers with a similar proposal.

The idea of aggregating Wi-Fi hotspots is not a new one, and not without financial pitfalls. Boingo Wireless, started by the EarthLink founder Sky Dayton is one of the largest Wi-Fi aggregators and currently claims 25,000 Wi-Fi hot spots; it charges users a $21.95 monthly subscription fee for access."
- Jaanus at Skype
"FON is trying to make it easy for anyone who has already invested in broadband and a wireless access point to securely share their Wi-Fi, so together we can build a unified global wireless network which is easy to access, safe to share and reasonably priced. What Martin Varsavsky and the people at FON are doing in making it easy for people to access Wi-Fi anywhere is exactly what we had in our minds as a logical next step as Skype began to proliferate across desktops around the world, so we're delighted to be a part of the FON revolution."


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