West L.A. cellphone service provider FreedomPop scored a $50 million investment last week, which will be funneled toward growing the 5-year-old company’s international presence.
The company expanded its service to the United Kingdom and Spain earlier this year, and by the end of next year plans to debut in eight Asian, Latin American and European markets. As a mobile virtual network operator, FreedomPop doesn’t own a cellular network but rather partners with local service providers to basically rent bandwidth for its customers.
“Our aspiration is in the next five years to be a top 10 carrier,” said Steven Sesar, FreedomPop’s chief operating officer.
The $50 million investment came from Luxembourg-based LetterOne and is the second $50 million infusion the company has received this year. In January, it announced it had raised a $50 million Series C round at what Forbes reported was a $250 million valuation. LetterOne’s stake was not disclosed, nor was the most recent valuation.
Founded in 2011 by Stephen Stokols, its chief executive, the company prior to the most recent investment had raised $109 million through investors including Intel Capital, Mangrove Capital Partners, and Partech Ventures.
In a statement, Alexey Reznikovich, managing partner of LetterOne’s L1 Technology unit, called FreedomPop a pioneer that is disrupting the traditional mobile phone business.
The investment group is co-owner of Dutch wireless carrier VimpelCom Ltd. and Istanbul-based Turkcell Iletisim Hizmetleri, which Sesar said helped distinguish LetterOne from other possible investors. These relationships could prove fruitful for FreedomPop down the road as the company looks to partner with local service providers abroad.
For many companies, $50 million would be enough to launch in just one market. But because the company operates as an e-commerce business with no brick-and-mortar stores, FreedomPop requires minimal infrastructure to roll out services.
Sesar said the latest round is enough to launch in 10 markets, with most of the proceeds from this round going toward online marketing, building out products for market, and integrating its service with local carriers.
“We are coming around the globe to disrupt,” said Sesar.
FreedomPop’s freemium model provides customers with no-cost calls, texting, and internet service – up to a point. Users are charged for add-on services, such as a second phone number, and for overage once they exceed a usage cap.
With a basic plan that provides users with 500 texts, 200 minutes, and 500 megabytes of data service free each month, FreedomPop has accumulated more than 1 million subscribers.
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