SIPphone Gets VC Cash

Michael Robertson’s San Diego, Calif.-based voice-over-IP start-up, SIPphone just raised $6 million in funding from New York-based Dawntreader Ventures. The company behind increasingly popular Gizmo Project soft phone and instant messaging client is going to use the cash to expand into wifi and dual mode phones, Robertson told in a late evening chat yesterday. Dawntreader’s Ed Sim is going to join the board of SIPphone. (He explains why he invested in the company on his blog.) Existing investors in SIPphone participated in this round as well.

SIPphone will use the investment to expand their VOIP platform to portable devices which do not require PCs to make or receive calls and promote adoption of the open standard auto-provisioning system plug-n-dial. The San Diego headquarters is expected to triple in size over the next year with hiring primarily in business development and engineering.

SIPphone currently has about 20 employees. “There is no doubt that the price of voice calls is headed towards near zero, and companies like us need to make money off premium services and features that consumers are willing to pay for,” says Robertson. [ Read: The great VoIP implosion.] SIPphone is going to announce a new “premium offering” later this week. Robertson, who previously had started, says he is working on creating a private label business for SIPphone as well, and is already powering a low-cost calling service called iPhox.

SIPphone was rumored to be in talks with News Corp, for adding voice functionality to There were rumors of a $50 million buyout offer from Rupert Murdoch. While those talks haven’t gone anywhere, this new round of funding will give SIPphone the runway it needs to get market traction.

While it is no Skype, The Gizmo Project has still managed to get 400,000 registered users, of which nearly 29% are Mac users, Robertson says. About 2% of Gizmo Project are Linux desktop users. “In the end our adherence to SIP will pay off because it will allow us to offer many services easily,” says Robertson. One of the benefits is the ability to connect directly to other SIP-based services such as Earthlink’s VoIP service.

Licensing the technology to device makers for a sliver of profits is a model being used by Skype to generate revenues, and I guess SIPphone is going to do the same as well. Google is also rumored to be working on similar strategy and trying to lure hardware partners, but no recent developments. If the Skype experience of feeding-off-the-licensing margins is anything to go by, this will indeed a very tough business.

You're subscribed! If you like, you can update your settings


Comments have been disabled for this post