Vonage formerly announced yesterday its latest VC funding and that new investor Bain Capital led the recent round.
The company recently raised $105m, last August, and still has much of that money in the bank, Rego said, declining specifics. We were building our war chest for the expansion.
This money is truly expansion capital, Rego said. The VoIP seller plans to expand into at least two Pacific Rim countries, potentially in Singapore and China, by the end of the year, Rego said. Exact location will depend on regulatory requirements, broadband deployment and partnerships with retailers, he said. It also will use the money to actively market its service in the UK.
The latest round will take Vonage to profitability within a year, he said. If the company had not expanded into Canada and the UK earlier this year, it would be cash-flow positive, according to Rego. The company declined to cite how much it spends per customer acquisition, but analysts say it spends roughly $10m a month.
Rego said the company plans to remain independent, which means not be acquired by a larger company. When the company does turn a profit, he said it would assess whatever options are out there … we kind of live in terms of today.
The CFO said rumors about Vonage CEO Jeffery Citron being banned from running a public company are categorically incorrect. Citron ran into some trouble with the US Securities and Exchange Commission a few years ago over trades at Datek. As part of the settlement with Citron, it has been rumored that the SEC forbid him being the head of a public company.
Rego also balked at the increasingly competitive landscape for VoIP services, in the form of large cable operators (CableVision and Time Warner Cable) and networks (Verizon and AT&T). We find, oddly enough, that when the larger players come in we actually do better, he said. Vonage plans to sign up more than 1.2 million users by 2006. Currently it has about 600,000.
Separately, a family in Florida said last week it is suing Vonage after they were unable to reach a 911 emergency services operator before their three-year-old daughter died, according to local reports. Cheryl Waller and her family had recently signed up for Vonage’s VoIP service, but did not realize it did not provide the typical 911 service of traditional operators.
Problems with Vonage’s existing 911 services have plagued the Edison, New Jersey-based company. Two state attorney generals have sued Vonage in as many months for misleading customers by failing to make clear they would not have traditional access to 911 services when using its VoIP service. Vonage recently struck a deal with Verizon to use its 911 network in New York City and hopes to do make similar deals with other network carriers elsewhere in the Untied States.
