FON, a startup that aims to create a global network of shared WiFi connections, has raised $21.7M in its first round of funding

February 6, 2006

3 Min Read

MADRID, Spain -- FON, (http://www.fon.com/) a company focused on creating a global network of shared WiFi connections, today announced that it has secured euro 18 million (USD$21.7M) in Series A funding from Index Ventures, Google, Sequoia Capital and Skype. Index Ventures led the round. The company also announced that Danny Rimer (Index Ventures), Mike Volpi (Cisco) Niklas Zennstrom and Janus Friis (Skype) joined the board. Existing board members include Martin Varsavsky, FON CEO, and Antonio Fuentes, FON CFO. This announcement illustrates the willingness of leading technology companies and venture capital firms to jointly invest in the development of a global WiFi infrastructure.

Founded just three months ago by serial entrepreneur Martin Varsavsky, FON's objective is to build a global WiFi network bottom up, with one million hot spots by 2010. To do this, FON users, or "foneros," are able to connect to the Internet via FON WiFi hotspots provided by other foneros. For foneros, the development of the FON global network means they will be able to connect to the Internet safely and securely all around the globe. For service and application providers such as Skype and Google, the FON network makes their services more ubiquitously available. For ISPs, FON provides a way to expand their reach globally. For developers, the FON network is a new platform for creating and delivering services on a global scale.

With a simple download-and-install approach, similar to Skype's, FON is a secure "by-the-people, for-the-people" network. FON has registered 3,000 members since it went live with a beta of its service in November, 2005. The company plans to use its funding to grow the network of foneros and support the growth of WiFi worldwide, particularly in countries where broadband is currently unaffordable to most people.

FON will drive its revenue from a multi-tiered subscription model. Members sign up in one of three foneros categories: Linus, Bill or Alien.

  • Linus members share their home WiFi hotspot with the FON network and can use any FON hotspot for free.

  • Bill members share their WiFi hotspots with Alien members for a fee. Bills cannot roam the FON network for free.

  • Alien members pay to use the FON network on an as-needed basis. Fifty-percent of revenue generated from Aliens will be shared with Bills. Alien memberships are currently available on a free-trial basis.



"Aliens are at the heart of our business model," said Varsavsky. "As we continue to grow, we will attract consumers for all three foneros categories and achieve our goal of creating a global WiFi nation. This is a great opportunity for ISP's, bloggers, developers, early adopters, consumer electronics manufacturers and the 'average Joe or Jane' with a WiFi connection to make money by letting other foneros connect to the Net safely and simply."

ISPs are already signing up to partner with FON. "As a leading ISP in Sweden, Glocalnet is happy to partner with FON as the concept will enable us to bring even more value to our offering. Being able to offer internet access when out of home at no extra cost is a strong selling point," said Martin Tiveus, marketing director of Glocalnet. FON expects to announce other ISP relationships soon.

"There is perhaps no more important goal for the industry than helping to make broadband Internet access available around the world," said Skype CEO Niklas Zennstrom. "FON has a great idea to help people share WiFi with one another to build a global unified broadband network, and we're happy to lend support. Enabling more communities to tap into the power of the Web benefits us all."

Fon

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