Freedompop Opts Out of Merger, Raises $30 Million

August 4, 2015

It doesn’t take much to start a company but it takes a whole lot of hard work, luck, and finagling in order to create a successful one. L.A. based tech start up FreedomPop has been in the news consistently since they were first established back in 2012. The company is known for their ‘free phone service’ and it has quickly gotten them a following. In fact, with the telecommunications market the way it is, FreedomPop has been a hot topic for possibly selling their company in recent weeks. Well, the rumors can be put to an end as CEO Stephen Stokols laid them to rest.

CEO Stephen Stokols finally let people in on the worst kept secret in the mobile phone world when he announced that the company had no intention to go through with any of the six possible M&A offers that slid across their table. Stokols told reporters that it was a “premature time to sell” and that instead they would be focusing on their outward growth rather than trying to offload what they have currently done. With the way their company is trending, this might end up becoming a million dollar decision.

FreedomPop exists in a very niche world because they offer their most important service completely free to subscribers, no strings attached. FreedomPop gives all subscribers a limited amount of completely free talk, text, and mobile data. Every month users who go over this amount will be hit with overages or else shown alternative plans that better fit their needs. The result is a large consumer base that quickly upgrades on its own accord.

The reason that FreedomPop can get away with offering a free service is pretty simple. They get wholesale prices from Sprint and are thus able to offload all of these free accounts against those that eventually end up spending money. The business plan is working and they expect to generate another $50 million by years end thanks to their million subscriber user base.

With M&A talks shut down we were able to see FreedomPop focus on the latest round of Series B investing. The company picked up an additional $30 million from European venture capitalists. Leading the way was Partech Ventures, the company who has backed 21 different start ups and 50 total companies since 1982. Mangrove and DCM Capital also put in unlisted amounts for their own supported investments.

6. http://www.usatoday.com/story/tech/columnist/shinal/2015/06/18/freedompop-30-million-att-t-mobile-sprint-comcast/28922977/

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