Hotxt, a low cost unlimited message text service which uses a client application on the handset to message other Hotxt users via the Internet, has added new social networking features aimed at the 12.59 million mobile subscribers under 24 years of age who text more than talk.
The new Hotxt features include group messaging, an online “web email” interface with texts, a “family or friends abroad” feature and broadcast text. It offers all-you-can eat pricing for £1 ($1.79) a week, a far cheaper rate than SMS.
Hotxt was founded by Doug Richard, of the BBC’s Dragons Den fame and a founder of Library House, and David Whitewood. It launched in March 2006, securing $6.5 million Series A financing from Tudor Investment Corporation, a global alternative asset management company in July.
In an exclusive interview with TCUK, Doug Richard said Hotxt was positioned to take advantage of our insatiable appetite for messaging. “The UK has had another enormous growth in text messaging. We can’t get enough of text messaging,” he said. He believes Hotxt is part of a new generation of new firms looking to take new advantage of the convergence of the mobile and the Net.
He said the next stage with Hotxt was to provide an interface with social networking web sites is in discussion with a number of these at the moment. “Our intent is to have Hotxt be able to inter-operate with online instant messaging, social messaging, sites like Bebo, Myspace etc”
Hotxt has few competitors in its business model, but the closest in the UK is the ‘friends and family’ funded Tex2Me (pictured below), launched on a shoestring in December 2005. Tex2Me offers a ‘no-strings’ free service (apart from operator data charges) and it’s lack of subscription model makes it more Skype-like. However, Tex2Me is unlikely to have anywhere near the marketing budget of Hotxt, and it doesn’t have an equivalent of Hotxt’s “Out” service which enables a user to text people who do not have the Hotxt application for a lower cost than normal texts. [UPDATE: I just got off the phone with Tex2Me's Stuart McWilliam and he says this facility will be available in a new beta soon on a bulk pre-pay basis and they will be announcing a major backer soon].
As a noted investor himself, richard said the venture climate today is good: “It’s a fantastic time to start new firms now. The UK is a very good place. Not quite as good as Silicon Valley but still pretty good. But I would still do a mobile firm in the UK, not Silicon Valley.”
On the capital available to startups he said: “There is great deal of available capital right now, there is not an undersupply. A Library House June report measured and analysed venture investment in the UK and we were able to show that the vast bulk was invested in the ‘putative’ gap.”
“Investors are investing in the gap – so that’s not an issue. The issue is that there are a lot more business than received funding. I am hard pressed to find companies that are investable that didn’t get funding. The biggest complaint is that there aren’t enough investable companies,” he added.
He says part of the problem is that there is a lack of knowledge among entrepreneurs about the investment process and what investors are looking for.