Andreessen Horowitz Makes Strategic Investment In Mobile Payments Platform Boku

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Recently-launched mobile payments startup, Boku, has announced that they have received a strategic investment from VC firm Andreessen Horowitz. Boku has declined to reveal the funding amount from this round, but to date the company has raised a whopping $38 million since its launch a year ago. As part of the deal, Marc Andreessen and Ben Horowitz will also take on an advisory role for Boku.

Boku, which just raised $25 million and rebranded its platform in January, doesn’t require users to have a credit card or bank account to make a micropayment. Users enter their cell phone number on the site, reply to a text message and then all virtual charges are automatically charged to the user’s monthly cell phone bill. As we’ve said in the past, it’s ridiculously easy. The company also acquired Paymo and Mobillcash over the past year, systems that had significant international reach, Boku gained a strong base of users around the world. Currently Boku is available in more than 60 countries and on over 200 carriers worldwide.

The company has also made a few key hires on the product side. David Yoo, former SVP and Chief Product Officer at AT&T Interactive; and Kevin Grant, former VP of Sales for MobiTV, are joining the executive team as SVP of Strategy and SVP of Sales, respectively. Both will be working to create new partnerships and reduce carrier fees in the mobile payments space.

While mobile payments are set to gain considerable traction on social network, one potential obstacle to adoption are the high fees that mobile carriers charge to the payment systems (which are then passed on to the publisher). Boku told us last June that different cell phone carriers charge varying fees that range between 10% to 50% of the purchase price, which is a hefty amount in transaction fees. But Boku is steadfast in its commitment to remedy this issue. Ron Hirson, Boku’s marketing chief, says the company is ramping up negotiations with carriers to lower these fees. He says that carriers will eventually see the benefit in lowering fees as they will gain a critical mass of users. “We want to do what PayPal did for email to the mobile phone,” says Hirson.

Of course, Boku faces another obstacle besides just carriers. The company faces competition from fellow mobile payments giant Zong, which just raised $15 million in funding and is the mobile payment provider for Facebook Credits. Zong also recently launched an alternative payments system, called Zong+, which lets users bill microtransactions to credit, debit and prepaid cards.

But Hirson says that Boku also has a presence on Facebook and is steadily growing its availability on the world’s largest social network. The startup powers mobile micropayments for a number of popular game developers, including Playdom and Playfish, which was acquired by Electronic Arts last year.

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