Capital Streams Into Internet Phone Company
By Matt Richtel
May 9, 2005
Vonage, the Internet telephone company, is expected to
announce formally today that it has raised $200 million in new private
investments, one of the largest single
rounds of venture capital financing in the last decade.
The size of the deal shows the confidence of the lead investors,
including several major Silicon Valley venture capital companies, that
Vonage, a privately held company, can continue to thrive as an
phone company even as regional Bell companies and cable
companies enter the business.
John S. Rego, the chief
financial officer of Vonage, which is based in Edison, N.J., said the
money would be used primarily for marketing. Mr. Rego said the money
would be sufficient to get the
broadband phone company to profitability in 2006.
This latest round is tied for the seventh-largest single round of
private equity financing since 1995, Mr. Kedrosky said. It is the
third-largest round of financing over all and the largest in a
telecommunications venture since the Internet bubble burst in 2000.
Vonage has nearly double the number of Internet telephone subscribers
as its nearest competitors, Cablevision and Time Warner Cable. But the
cable companies and
traditional telephone companies, like
Verizon, are expected to capitalize on their brand names, industry
One factor in Vonage's
favor is that the Bell companies, including Qwest and Verizon, have begun to allow consumers to
buy high-speed Internet service without paying for
Consumers who buy this stand-alone Internet access can use
or some other company for broadband phone service.
(Source New York
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