Fon, the Spanish startup that wants to bring free WiFi across the planet, just raised $9.5 million (six million Euros) in a C round led by Coral Capital Management. Also investing was British Telecom (which struck a distribution partnership with Fon last October), Google (a previous investor), investment bank Allen & Co., founder Martin Varsavsky (through his Jazzya holding company), and Joi Ito (through his investment vehicle, Digital Garage). That brings the total raised to more than $50 million (34 million Euros).
The way Fon works is that you set up a Fon WiFi router at your house or business and you can either give WiFi access away for free to other Foneros in exchange for free access when you are roaming about, or you can charge people for access and get 50 percent of any resulting fees. Fon says it has 170,000 active routers worldwide, with the leading countries being the UK, Japan, France, Germany, and the U.S. (in that order). In the UK alone, there are more than 70,000 BTFon members. By linking up with the telecom companies (Fon also has a partnership with Neuf in France), Fon gives them a way to offer their customers roaming broadband service. Fon is preparing to launch in Russia with a telco there called Sistema, whose largest shareholder is Coral. Says Varsavsky:
As far as our strategy, more and more we are collaborating with large telcos, which pundits wrongly thought were going to be our enemies. And that is because we have proven that a Fonero is a more loyal bandwidth customer as he gets to roam for free.
He plans to use the new cash to launch Fon in Russia this June, and to put out a new version of the Fonera router (also in June). The Fonera 2.0 router will come with a USB port so that members can connect it to a hard drive and upload photos and videos to the Web, download movies, or otherwise manage their media on online services. And in December, Fon will release an 802.11n WiFi router.
(Varsavsky also recently launched Twixtr, a side project that is like Twitter with photos).