FreedomPop Ends A Round With Another $5 MillionThursday, July 11, 2013
FreedomPop is polishing off its A round of funding with an extra $5 million from investors.
The latest mini-raise gives the West L.A. company a total of $16 million invested, which should come in handy as the seller of free Internet and voice plans deals with a crush of consumer interest.
In April, FreedomPop released a wireless hotspot that allows laptop, tablet and smartphone users to connect to the Internet. The $39 device hooks into Sprint’s 4G network and offers 500 megabytes of free data, 200 minutes of voice, and unlimited texting a month.
FreedomPop chief executive Stephan Stokols said demand was intense for the devices; at times the company had a backorder of 10,000 units, though he says that’s now down to the low thousands.
The extra cash from investors will not only help the company clear out the backlog but also prep the inventory for the next offering: a FreedomPop phone.
“When we launch (the phones) the money gives us more fuel to be aggressive and reduce wait times,” Stokols said.
FreedomPop’s phones, slated to be released later this summer, will be HTC devices loaded with a modified Android operating system. Stokols said the company will be selling phones by other makers in the weeks following the launch.
The handsets, selling for $99 or $149, will also be able to tap directly into Sprint’s 4G network without the need for an auxiliary device; data plans will be the same as with the hotspots. FreedomPop’s revenue comes from customer upgrades to larger monthly data allotments.
Since the company announced the phone program in June, executives said more than 100,000 people have expressed interest. It’s a daunting number given FreedomPop’s troubles to keep up with demand for the hotspots, but Stokols said the company has been purchasing refurbished phones en mass to meet the demand
“Our investors thought we were initially being conservative with our purchase of devices,” Stokols said. “Now we’re not in the situation with the hotspots where we don’t have the inventory.”
DCM Capital and Mangrove Capital participated in this final part of the A round. The company is in the market for a B round, which Stokols hopes will close early next year.