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Summary:

Mobile payments are an incredibly promising phenomenon, so much so that the top venture capital firms are lining up against each other for a fight. Now, the teams are basically complete, with newcomer VC firm Andreessen Horowitz taking its spot next to San Francisco-based Boku.

Mobile payments are an incredibly promising phenomenon — set to reach $633 billion by 2014 — so much so that many of the top venture capital firms are lining up against each other for a fight. Now, the teams are basically complete, with newcomer VC firm Andreessen Horowitz taking its spot next to San Francisco-based Boku.

How Boku works (it still uses the Paymo brand, which it acquired)

Boku is almost the definition of a “fat startup,” said co-founder and SVP product and marketing Ron Hirson in an interview this week. The company was founded at the beginning of last year, quickly raised funding to buy two of the biggest competitors in the space of mobile payments for virtual goods — Paymo and Mobillcash — and now is facing off against the third, Zong.

Boku had already raised $38 million, and Andreessen Horowitz belatedly jumped into the previous round, which closed in December 2009. So now the company’s investment team is Benchmark Capital, Index Ventures, Khosla Ventures, DAG Ventures and Andreessen Horowitz. Meanwhile, Zong’s backers are Matrix Partners, Advent Venture Partners and Newbury Ventures. Other firms have looked farther afield to places like Europe and India where mobile payments markets are further along, with enStage backed by Accel; PayMate backed by Mayfield Fund, Kleiner Perkins and Sherpalo Ventures; and Klarna backed by Sequoia Capital (the PayPal investor, back in the day).

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  1. Fat startup that will burn all the money and die in less than 2 years… sms carrier based payment systems are the dinosaurs of the payment systems, have been tried for a decade and their high costs, fraud and risks make them worthless. They will grow for a while and then will be replaced soon with next gen mobile payments, secure, faster, easier and more importantly carrier-free.

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  2. I agree it seems none of these startups has any compelling advantage or barrier to entry. whats to stop google or payapl from just blowing them out. or is that there game, to get bought by them?

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    1. They have relationships with carriers. The various billing systems are ridiculously complicated so yes, I think it is defensible.

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  3. You can’t buy anything of real value via phone because phone companies won’t support the fraud like a credit card. Only useful for “virtual” goods where nobody loses money when there’s no payment. Notice that nobody mentions that important fact in this hype article until after the VC’s get their money out of it later.

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