Why IntelePeer Snagged $18 Million in Funding


IntelePeer is one of those startups that has little buzz but a lot of traction. Formerly known as VoEx, the San Mateo, Calif.-based company lacks the hype around, say, Ribbit, but it has been delivering on the Voice 2.0 promise of integrating voice with web and enterprise applications for a long time. And doing well — IntelePeer turned EBITDA positive in June and is on its way to revenues that will exceed $50 million in 2009.

That is one of the reasons the company was able to snag $18 million in Series C funding from Vantage Point Partners and previous investors including Kennet Venture Partners, NorthCap Partners and EDF Ventures. The new round is incredible because of its timing — though I am betting that the new investors are looking at the $105 million Ribbit exit and letting their imagination run wild. But then there aren’t many suckers like BT around anymore! The company has raised (including this round) a total of $35.5 million since its inception in 2003.


Thanks to its own voice peering fabric, IntelePeer is on its way to doing close to 7 billion minutes of voice traffic this year, Chairman and CEO Frank Fawzi told me yesterday. “We are a lot larger than Ribbit and Jajah by multiple times,” Fawzi quipped. Jajah is heading down the same path at IntelePeer and the two companies are poised to become fierce competitors — that is if Jajah makes it out on the other end of this downturn.

So why does IntelePeer need the money? “We only just turned EBDITA positive and we need to support our expansion,” Fawzi claimed. Of course, I never expected him to say that he was buying insurance — his investors wouldn’t like that. Plus, it’s prudent to take this money right now. As we all know, downturns are as unpredictable as the tornadoes in the Midwest — and leave just as much destruction in their wake.



Marc Fawzi

There is so much turmoil behind this story that is being masked by the hype.

I was Intelepeer’s Chief Architect between July 2006 and Nov 2007. I was recruited after they received their Series B funding of $12M in 2006 when they were already revenue generating with a positive margin. So during the 15 months I was there the company was floundering on the vision front and while my team executed the specifications we were given in exactly matching manner and significantly under budget (well under $500,000 total for salaries for my team, including myself) all the output we gave them, which was identical to the specification we were given, was tossed away (never used) and the $12M went up in smoke on marketing and PR activity, network upgrades that were not well thought out, hiring a CEO who was well recommended by IPO underwriters and a COO from Level 3 that was an execution oriented guy, who were later fired at whim because the founder and Frank could not take the blame for zero-results, nor could the VCs. I was specifically told not to act independently, which meant that my tea had to execute the specification from product management but we waited 10 months for product management to put out the spec for one of the VC’s own pet vision, after which we executed with speed and quality (and got that VC’s praise during the board meeting) but we were purged out of the company together with the COO and CEO because the $12M was nearly gone and the company had not yet found a viable vision and they had to place the blame on others.

Things were different when I worked for Frank back at CommTech-ADC where I took charge of designing and building his core product (the Business Process Editor, a workflow infrastructure on top of which the company built a service deliver solution.) I was able to act independently and propose the design of the workflow engine to Commtech’s IPO partner at the time who opted to go with it and we spent close to $2M overall and sold the company for $178M.

I do admit that when we were waiting for the specifications from product management and we got impatient we produced very rough prototypes out of boredom, which weren’t up to release standard but we were not given any specification or targets during those times so we could have just sat around and did nothing, which would have been better in retrospect. But like I said when the specifications were finally produced after almost a year of waiting we produced software that exactly matched the specifications but were tossed out anyway and after removing the CEO, COO, myself and a few others because they had to lay the blame on someone else other than the founder, Frank or the former lead VC.

Frank works by promoting his own version of reality and acting brutally even (or especially) against those who served him. The truth gets demolished in his drive for power at any expense.

I doubt very much Intelepeer has anything worth it but I am sure they’ll manage to sell the company to some greedy and easily fooled executive at Verizon or Microsoft who will be promised a lot and let down a lot. That’s Frank’s signature patten. They have no chance with Google because Google is known for walking out of deals if they smell anything funny.

So, while this very sour, and understandably so, I can only wish best of luck to the buyer that will end up bailing them out.

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Just checking back in and still nothing since November 14.

How should one interpret that?

Jeffrey Skelton

Or Ribbit disappears.

Once bigco buys little innovator, anything can happen. They could get Grand Central’ed. They could be huge. Or they could get written off.

Either way, I’m sure the quote meant Ribbit pre-BT acquisition.

Still wonder what JAJAH is doing?

Joe Black

Think about it a minute Om – Ribbit on top of BT’s global MPLS network…compare your little map of intelepeer’s “global network” with BT’s (www.bt.net/info/maps.shtml).

Joe Black

“We are a lot larger than Ribbit and Jajah by multiple times”. Last I read Ribbit was part of BT…


@netzkobold Judging by your previous comment, are you saying that Jajah has served more than 7 billion minutes thus far in 2008? Just curious.



It’s like fund-raising magic! Have a company with growing revenues, happy customers, and cash flow positive, and raising money is not that tricky. Buying insurance is also very smart. As all too many people are finding out from their banks, the time to ask for money is when you don’t need it.


Simply based on the numbers provided in this article IntelePeer is smaller than JAJAH and his statement wrong.


Earnings before Interest – not Income.

Frank Fawzi is a smart and shrewd player – excels at execution. This is not his first time around the block.

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