The trials and tribulations of the competitive voice service provides such as Vonage, have forced venture investors to look at startups that marry VoIP to mobile phones. Any application that can lower the high mobile phone tariffs can quickly gain traction. And that is enough for investors, who ready to put down mega dollars.
You might have heard of names like Jajah, iSkoot, Mobiboo and Fring, with some of them getting big cash infusions from the likes of Sequoia Capital and Khosla Ventures. Add Truphone to this list. The UK-based mobile VoIP startup has raised £12.5 million ($24.5 million) in Series A funding from Wellington Partners, Independent News & Media, Burda Digital Ventures and existing investors Eden Ventures and angel investors.
The company plans to set up what it describes as a global Mobile Internet Network Operator. The company has signed up deals with Wi-Fi network operator The Cloud, which lends some credence to its claim.
Much as I like Truphone the application, I find the company has an uphill climb. The fancy MINO acronym might sound impressive but in reality Truphone will be fighting the battle for cheap minutes, which is great in early days but then it quickly gets old.
The only reason I use them is because the calls are cheap, cheap enough to make me wonder what really is the margin for Truphone after it has paid off the incumbent who terminates my call in India.
With multiple phones to support, one cannot overlook the problems and costs involved with developing and deploying software to many different mobile platforms. This at a time where there are competitors popping up all around them. Of course, what is to prevent the Vonages of the world to play the same game?
Here is the twister: if Truphone becomes really popular and is embedded in all phones, then you can make free calls to other Truphone-enabled phones. In other words no revenue opportunity, just like Skype. Forgive me for thinking, that this investment is laced with a dash of irrationality.