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Summary:

San Francisco-based Boku has raised a sizable round of funding totaling $25 million to build a mobile-payments company that they believe can…

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San Francisco-based Boku has raised a sizable round of funding totaling $25 million to build a mobile-payments company that they believe can one day compete against financial institutions, like Mastercard, Visa, and even online providers, like Paypal.

The year-old company has partnered with wireless carriers around the world to let people use their cellphones to pay for online virtual goods from social networks, like Facebook and MySpace. Once a user enters their cellphone number, and verifies the charge via text message, the amount appears on a user’s next bill. Even just a week ago, the idea may have sounded less probable, but since then the Red Cross has collected $22 million for its Haiti relief efforts via text messaging, signaling that consumers are ready to start spending by mobile phone.

Investors in the third round include: DAG Ventures, Benchmark Capital, Index Ventures and Khosla Ventures. In total, the company has raised $38 million. In an interview with mocoNews, Ron Hirson, BOKU’s SVP of product and marketing said the money will go towards global expansion: “Right now with 196 carriers, we reach 1.8 billion potential subscribers, but there are 4 billion people worldwide that have cellphones.” Hirson added that more subscribers make them more appealing to more merchants. In doing that, a lot of money will be spent on adding redundancies and technology to their system similar to a bank’s. “We aren

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  1. That’s a pretty big leap to assume people who donated using a premium sms service for the Red Cross for Haiti relief efforts is willing to subscribe to Boku business model.

    These dotcom era stories about someone getting millions in VC firms carries no merit or weight and is nothing more than speculative elitism among a few. I see it as nothing more than a marketing ploy to appear legit.

    Can’t wait for the era when stuff matters when the actual consumer adopts it…

  2. Chris Claydon Tuesday, March 9, 2010

    Beware: BOKU/Paymo owe me a very large sum of money in referral fees for referring other merchants and they have not paid this. Payment is now 18 months overdue. A large number of emails and phone calls have been ignored.

    For this reason, you should not deal with Paymo/BOKU – find a more trustworthy mobile payment processor. If you make significant earnings with paymo there is a chance you will not get paid. I am now forced into the position of having to take legal action against them in a foreign country to try to recover what I am owed.

    If paymo staff are reading this please take note: I’m going to publicise this issue around the web as much as I can in the hope that paymo will be embarrassed into paying what they owe me rather than having to go through the courts. I hope the lost revenue from the bad publicity will at least equal the amount I’m owed. This message already appears as a comment on result #1 for ‘Paymo’ in Google, and may other places.

    Chris Claydon, Profile Technology Ltd.

  3. BOKU has a big problem, which is that it is not in control of its destiny. The company does own its payment processing platform and has established direct relationships with merchants, but its carrier partners – T-Mobile, AT&T, etc. – own the customer relationships and can dictate the terms of service, including the pricing.  The way I see it, the start-up will not be able to remain an independent company. So BOKU’s best possible exit strategy is to make itself attractive to as many potential buyers as it possibly can and try to trigger a bidding war among them.  http://blog.unibulmerchantservices.com/can-boku-survive-the-evolution-of-direct-carrier-billing

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