FreedomPop Stacks More CashLands $5 Million Round As it Prepares to Launch ‘Freedom Phone’ 7/11/2013 7:13 AM Eastern
FreedomPop has closed a $5 million series “A.1” round from DCM Capital and Mangrove Capital that extends its total funding to $16 million.
FreedomPop CEO Stephen Stokols said the company didn’t really need the cash, as the company’s valuation is now two times what it was when it closed its last round of funding about five months ago. The A.1 round does provides a “safety net” and “added assurance around our phone launch coming up this summer. It is about getting the device supply ready for demand,” he said.
Stokols is referring to a “free” Android-powered Freedom Phone service that will guarantee 500 megabytes of data, unlimited texting and 200 voice minutes per month. FreedomPop users will also be able to call each other for free, according to the company announcement about the product in June. Stokols said more than 100,000 people signed up for the beta program about a week after the program was announced.
Stokols also said the new $5 million infusion also relieves pressure to pursue its earlier plan to raise a Series B round in the range of $15 million to $20 million. He doesn’t believe FreedomPop will need to consider that for another 12 to 18 months.
Although FreedomPop will add voice later this year, the company has cut its teeth on data-only hotspot devices targeted to cost-conscious consumers. In April, FreedomPop debuted a 4G/3G hybrid hotspot that uses the Clearwire WiMax netork and Sprint Nextel’s 3G network.
FreedomPop's data/voice combo could put it in more heated competition with cable operators that are matching in-home broadband services increasingly with on-the-go Wi-Fi deployments and, in some cases, partnerships with cellular carriers. For example, four cable oprerators -- Comcast, Cox Communications, Bright House, and Time Warner Cable -- are selling cable/mobile bundles through their partnership with Verizon Wireless.
FreedomPop is also working on data products that will tap into Sprint’s Long Term Evolution (LTE) network. FreedomPop expects to start with an LTE hotspot. “That will happen this year, potentially soon,” Stokols said, noting that there’s more confidence that the network buildout will happen now that Japan’s Softbank Corp. has closed its $21.6 billion deal to gain a controlling stake in Sprint.
FreedomPop also announced that Nextel co-founder Chris Rogers has joined as a board advisor, joining BT Group’s new CEO Galvin Patterson.
FreedomPop was founded in 2011 and is backed by Skype founder Niklas Zennstrom.