Jaxtr Raises VC: More money into VoIP

Lately I’ve been fielding a lot of calls with respect to venture capital and M&A in the new voice space, and, in true Silicon Valley style, news was afoot: Jaxtr just closed around $10MM in new venture money. Apparently, August Capital led the round, along with Mayfield who funded them initially. I hear they got a nice upround, which is good for them and the marketplace. I blogged Jaxtr here and here. They're one of the many companies playing in the free/cheap long distance VoIP game.

The model goes like this...build a simple web app that enables free VoIP, launch it in 200 countries, and watch it grow. So long as it's free, it will grow (and, unfortunately, cost you). Then you look at your analytics and you realize that most of your business comes out of geographies that don't hold value, because customers there are loyal only to your offer of “free” or “cheap” – when something cheaper comes along, those customers are gone. Your best bet is that someone buys you out at just the right time...

Jaxtr is no different, other than they provision phone calls out of hyperlinks and widgets. (A novel idea actually.) They have always pitched their "viral growth" model to the industry, however I've always contended that when your leading value proposition is free long distance, that you will grow either way (viral or not). Is their primary competitor Jajah viral too?

I get a lot of press and venture folks asking me what Jangl is vs. Jaxtr. If I wasn't living and breathing it, I might be confused too. Similar names, similar messaging, but very dissimilar companies. Here's a quick tutorial:

Jaxtr = cheap long distance with widgets and links, focused on direct to consumer service, no revenue today, planned revenues based on talking minutes and SMS ads. The focus is international markets, with big usage in India, China, and Sri Lanka (the CEO himself said about 75% of their users are in these areas). They have coverage in 200 countries.

Jangl = bridges your phone to your online life, focused on giving phone users privacy and control with the people they meet online, revenues today via licensing and subscriptions with social networking and dating sites today, additional planned revenues in transactions and media/advertising. The focus is on consumers with online profiles, direct to consumer and via partnership. Jangl is already embedded in more than 20 million profiles. Biggest in the U.S., UK, Canada, China, and France. We have coverage in 32 countries.

In a sense, TechCrunch’s headline about Jaxtr says it all. In our view, the real utility of voice comes from connecting people across a wide array of social networks and social media and building a platform on which people can put talking and texting capability directly into their profiles -- and then bring that to their phone. To build this, you need to work directly with social networks and deliver customized services that are contextually-relevant for each of them.

In short, you need to go where the people already are, and give them wholly new ways to connect. That’s what we’re doing. It’s a far cry from cheap long distance. . .but then again, with our differences now clearly on the table, maybe people won’t get these two J’s confused anymore.

Technorati Tags: VCs, voice 2.0, voip, jaxtr, jangl

Comments

[nothing2it]

Hmm, let me see if i understand. Jaxtr just raised 10M so they can continue to piss away money letting people call home 12K miles away? Isn't this kind of customer not only the first to abandon for something cheaper, but also the type NOT too keen on clicking on SMS ads? Something will ALWAYS be cheaper (including people looking for cheaper long distance).

I love what you guys are doing, and I'd rather have your 20 million profiles than Jaxtr's 10 million dollars any day of the week.

Why? Because your 20 million profiles will eventually yield serious opportunities and $, while their $10M is going. . .to get spent.

Nonetheless, this is good for your market. Just a little. . .humorous, I guess.

Congrats on the scoop!

[simon]

"The focus is international markets, with big usage in India, China, and Sri Lanka (the CEO himself said about 75% of their users are in these areas)"

I will be very surprised how many users in China going to Jaxtr when it is not in Chinese language.

[Daniel]

Business needs money to grow and thrive but their business plan is not always understood by traditional banking who is not keen on risk and has criteria that isn't generally conducive to building a better business.

[Free Articles]

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