Venture
Capital Streams Into Internet Phone Company May 9, 2005
By Matt Richtel
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
Internet phone provider 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 analysts said.
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 telephone service. Consumers
who buy this stand-alone Internet access can use
Vonage,
Lingo,
Packet8 or some other company for
broadband phone service.
(Source New York Times/Vonage forum)
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