How hot is the mobile video chat market? So hot that one of the leading technology companies in the space, Palo Alto, Calif.-based Tango, has raised $42 million aimed at rapidly growing its workforce to compete with startups like ooVoo and industry heavyweights like Skype. (s MSFT) The round also gives it a little extra cash to extend its video chat app beyond just mobile devices, to reach some 1.5 billion potential desktop users.
The Series B funding round was led by Draper Fisher Jurvetson and includes existing investors. It includes $8.7 million raised in a convertible note that was revealed through an SEC filing earlier this year. With the latest round, Tango has raised a total of $47 million since being founded just 18 months ago. The funding news was first reported by Bloomberg last month, but was just confirmed by the company today.
No doubt some of the investment comes as a direct result of Skype being acquired in a deal worth $8.5 billion, which is a huge amount for a company in what is still a very nascent video chat market. But while Skype began on the desktop and has been slowly (but gradually) adding support for the iPhone and Android mobile devices, Tango is taking the opposite route.
Tango launched with a mobile focus but is gearing up to start working on PCs, with the upcoming launch later this summer of a desktop app that will let users sign in and be contacted on their phone or on their computer. By doing so, Tango also hopes to attract more users to its service. It currently has about 18 million users on mobile devices, which is a far cry from the 600 million that Skype has attracted to date. But it sees desktop availability as a huge potential boost.
Eric Setton, CTO and co-founder of Tango, said in a phone interview that there are about 1.5 billion PC users worldwide, which is a huge addressable market. Not just that, but PC availability has been the #1 requested feature from its users.
The new app will mirror its existing mobile apps both in form and function, allowing users to be simultaneously logged into their accounts through multiple devices, and ensuring that their contact lists are synced across each. When an outside user tries to initiate a video chat, both the PC and phone will ring, enabling users to choose whichever device they want to talk on.
In addition to PC app development, the funding will be used by the company to ramp up hiring in general. According to Setton, Tango has added about 25 people in the last three months alone, bringing total headcount to 60 employees company-wide. He said it wouldn’t be surprising to see the company with more than 100 employees by year-end.
Many of those employees will work on increasing support for more platforms and mobile devices, as Tango struggles to deal with an incredibly fragmented device market. Some will also work on getting its software supported on the chip level, which will ease integration with devices once they finally come to market.
While Skype is the big heavy hitter in the video chat market, it’s not the only competition Tango has to contend with, particularly in mobile video chat. Over the last year, we’ve seen a rash of new entrants emerge, spurred on in part by the launch of Apple’s FaceTime application on iOS devices. (s AAPL)