This article was published on July 11, 2013

FreedomPop raises $5 million to meet strong demand for upcoming free phone service


FreedomPop raises $5 million to meet strong demand for upcoming free phone service

FreedomPop today announced closing an additional $5 million investment as an expanded Series A round to help it launch its free phone service by the end of summer. The company has also added Nextel co-founder Chris Rodgers to its board.

The company, which is gaining traction with its free 500MB monthly hotspot plan, announced the Freedom Phone in early June. The free phone service will provide 500MB of data, 200 voice minutes and unlimited text messages for eligible Android phones, which will include refurbished HTC EVO 4G devices and potentially Samsung and LG handsets. Pricing for the phones will range from $99 to $199.

Existing investors DCM Capital and Mangrove Capital provided the funds, which comes at double the valuation of the first part of its Series A round from back in February.

“We are growing fast and this new round will help accelerate growth further and provide the best product and customer experience possible to our users,” FreedomPop CEO Stephen Stokols explained in a statement. “We will also use these funds to increase our smartphone inventory ahead of our Android phone launch in the coming months.”

Stokols told The Next Web in an interview that signups for the Freedom Phone were better than expected. Over 100,000 customers registered for beta access within a few days of the announcement. Given the healthy demand for the phone, FreedomPop decided to take extra money to give it a better launch.

FreedomPop is bound to make some enemies in the industry by giving away data and phone service. Stokols recounted an experience where a T-Mobile employee (who no longer works at the company) reprimanded him while sharing a panel at a conference for “destroying the market”. Stokols did point out that Sprint loves his company, since they’re helping to drive wholesale revenue growth.

“Overall there is animosity from some of the big guys, especially on the retail side and especially about the [Freedom Phone],” Stokols said.

FreedomPop isn’t hiding its ambitions to take on the major wireless players in the US.

“We want to be one of the top four carriers. Period,” Stokols said. “We’re going mass market.”

It’s hard to argue with free. I’ve been testing a FreedomPop hotspot, and it’s been comforting to have it as a backup for when I don’t have service on my phone.

FreedomPop has a long way to go to crack the top four, but along the way, consumers should benefit from the downward pressure on wireless pricing and margins.

Image credit: iStockphoto

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