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FreedomPop Grabs $5M to Support Android Push

Dan Jones
LR Mobile News Analysis
Dan Jones, Mobile Editor
7/11/2013
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FreedomPop has decided to take an additional $5 million in funding to help support its rapid roll-out of a $99 Android phone this year.

The upstart U.S. virtual operator, which will offer its services over the Sprint network, revealed Thursday that it has taken $5 million in extra funding from existing backers, DCM Capital and Mangrove Capital. "We raised the money to really kind of supercharge the phone launch," CEO Stephen Stokols tells LR Mobile.

The company has now raised more than $16 million. (See FreedomPop Gets $4.3M.)

The FreedomPop CEO says the startup has seen unprecedented demand for the so-called "Freedom Phone" since it announced plans for its forthcoming offering in June. The company aims to offer refurbished $99 Android phones with 500 Mbytes of 4G data for free, unlimited texting, and 200 free anytime voice minutes each month, which should be available from the end of this summer. (See Next Up: FreedomPop Vox.)

One reason for raising the funds is that the company needs cash to source enough "A stock" used Android models, such as the HTC Evo and Evo 4G, to meet demand. "Key for launch is to make we can make a quality $99 Android phone available," says Skotols.

The other reason is that a smaller amount of additional funding now helps "reduce any pressure" on the company to seek a large B round of funding too soon.

Skotols says the B round will "probably" happen next year. "Then we can raise a very big amount without diluting the valuation of the company," Stokols says.

To help on that end, FreedomPop has just added ex-Nextel co-founder Chris Rogers as a "hands-on" board member. Stokols says Rogers helps the company focus on mobile and look beyond Silicon Valley.

"He’s got a ridiculous telecom network... Gives some credibility to the company," Stokols comments.

The FreedomPop boss is also happy that the Sprint mergers with Clearwire and SoftBank are now all squared away. "There was a bit of uncertainty with Dish," he says, suggesting it could have slowed Sprint's 3G and 4G updates if the rival bid had dragged on.

As it is, Stokols is now looking ahead to a FreedomPop LTE play before the end of 2013. "We may be able to launch our first LTE device ahead of schedule," he suggests.

— Dan Jones, Site Editor, Light Reading Mobile

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DanJonesLRMobile
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DanJonesLRMobile,
User Rank: Light Sabre
7/12/2013 | 2:47:36 PM
re: FreedomPop Grabs $5M to Support Android Push
Google loves to shut stuff down.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
7/12/2013 | 2:22:30 PM
re: FreedomPop Grabs $5M to Support Android Push
It's already raised $16 million. I'm more concerned that the data-sharing angle of it won't pan out. Why do you think the business model isn't sustainable?
Atlantis-dude
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Atlantis-dude,
User Rank: Light Sabre
7/11/2013 | 11:33:09 PM
re: FreedomPop Grabs $5M to Support Android Push
I find it hard to believe this will ever become a sustainable business. It needs the backing of someone with deep pockets such as Google to give it a fighting chance.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
7/11/2013 | 6:24:37 PM
re: FreedomPop Grabs $5M to Support Android Push
FreedomPop is an interesting startup. I like the business model of getting megabytes for referring friends, but I'm not sure I follow how sharing with your social network will work in practice. What incentives people to give up their data, and at what point do they do that each month?
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