Where will the next billion-dollar startups come from? The tech world and most VCs tend to be parochial, looking at Silicon Valley, maybe New York, and a few other hot markets like China and Brazil. But what about the Old Country?

Yesterday, I was having coffee with Saul Klein, a partner at Index Ventures and co-founder of Seedcamp. He believes that in every major city across Europe, Russia, and Israel, there are “a legion of companies that are capable of achieving billion dollar valuations and in some cases are likely to be able to do close to a billion dollars in revenues over the next 3 to 5 years.”

I asked him to name five while I pointed my iPhone video camera at him, and he was able to give me a much longer laundry list , which I’ve added below (along with some others he sent me afterwards). I’ve indicated which ones are Index investments and where each one was originally founded. Which of these will get into the billion-dollar club? (Note that some of these already are billion-dollar companies. You can click through to their Crunchbase profiles to learn more about each one).

Skype (London, Index)
Playfish (London, Index)
Wonga (London)
ASOS (London, Index)
Mind Candy (London Index)
Net-a-Porter (London, Index)
Betfair (London, Index)
Klarna (Stockholm)
Spotify (Stockholm)
Wix (Tel Aviv)
Conduit (Tel Aviv)
Fon (Madrid, Index)
Privalia (Barcelona, Index)
Criteo (Paris, Index)
Vente-Privee (Paris)
SoundCloud (Berlin, Index)
LogMeIn (Budapest)
AVG Technologies (Prague)
Kaspersky Lab (Moscow)
Ozon (Russia, Index)
Yandex (Moscow)
Mail.ru (Moscow)

Fon, the company with a fairly simple but extremely bold and tough mission (to cover the entire globe with free Wi-Fi), now boasts over 2.5 million hotspots located around the planet. In a brief blog post, entrepreneur, teacher and philanthropist Martin Varsavsky – who founded the company back in 2006 – makes it clear that this is a huge number.

He estimates that the company, which is backed by the likes of Google, Index Ventures, BT, Skype and Sequoia, “grows a T-Mobile every month”, by which he means that as many Fon hotspots light up in various parts of the world as T-Mobile has activated to date.

Varsavsky is also surprisingly open about the fact that two years ago things were looking down for the company and its Wi-Fi community. In the midst of worldwide economic turmoil, the charismatic chief exec says laptops simply didn’t generate enough interest in Wi-Fi roaming.

But then, he adds, the iPhone and other “beautiful bandwidth hogs” such as Android smartphones and other mobile devices with Internet connectivity such as game consoles, netbooks, tablets and advanced music players came along.

From the blog post:

WiFi gadgets are everywhere. Demand for WiFi exceeds supply. And at Fon, together with our telco partners such as BT, SFR, Zon, and others we are working hard so there is WiFi everywhere as an accessible signal. As we like to say, with Fon you share a little WiFi at home and roam the world for free.

Varsavsky says the next milestone to reach is 10 million, which if I’m not as bad at math as I fear I am means 5 times as much as the company has reached in the past 4 years.

But the Peek may just be the perfect device for Europe, and Spain’s FON is going to take a shot at distributing it here under the brand PeekFon.

(See Robin Wauters’ take on TechCrunch Europe)

FON CEO Martin Varsavsky hinted at the deal yesterday to me backstage at the Le Web conference in Paris. Here’s why he think the Peek is perfect for Europe – avoiding roaming charges:

The Peek doesn’t make sense in the U.S., he says, because people don’t have mobile roaming charges and so their phones are perfect for email. But in Europe people get “killed” on roaming charges. The PeekFon can help solve that problem.

Varsavsky later posted more information on his blog. The device will be available at FON on December 15:

The PeekFon will be 99 euros to buy, a reasonable price especially considering that the price includes both the gadget and 6 months of all you can eat email service anywhere in Europe. No roaming charges. No contract.

After that we will charge euro 12.90 per month for the service but as opposed to other email machines out there, there is no cancellation penalty of any kind if the user does not want to continue with the service.

This is a complementary service to Fon WiFi but it is not a WiFi product. It is a GPRS product. The idea is that with Fon you share a little wifi at home and roam for free but the PeekFon addresses those moments in which you can’t find WiFi in spite of Fon´s over 800,000 hotspots now available in Europe. With the PeekFon you get the most important piece of messaging, your email, anytime.

Browsing, Twitter, and other functionalities will be added within months but for now buyers have to think of the PeekFon as an email machine with a full keyboard.

Why is Fon launching the PeekFon?

Because in Europe we pay huge roaming charges when we leave our own countries. As a German you can come to France and easily pay in a day what the Peek will cost in a month.

Because many people still prefer a phone that looks like a phone for phone calls and sms and an email machine for email and don’t mind carrying two devices that do their jobs well.

Because even if you never leave your country Blackberry services, iPhone and Android services in Europe cost around 50 euros a month and have minimum 2 year stays and include no talking minutes. So in Europe even if you stay at home you spend 1200 euros to get email and if you travel around Europe you spend double that on the average. This would compare with 312 euros with PeekFon vs 2400 euros if you roam and 1200 euros if you don’t. So there are enormous savings for getting email.

Having said all this Fon recognizes that “apples to apples” a Blackberry, an iPhone, an Android is a better product than a Peek and if you have the extra money to sign 1200 euros contracts and spend a few thousand more for roaming the Peek can’t compete with the complete iPhone, Blackberry, Android experience. But as a pure and simple email machine the Peek can and its price is just reasonable.

The Fonera name doesn’t really mean much here in the U S of A, but it’s a little more popular in Europe. (I know I occasionally ran into Fonera Wi-Fi networks in Barcelona last year, and I had never seen one in Manhattan or Queens in New York.) In any event, Fon has, indeed, released the Fonera 2n router here in the U.S.. The big thing is that it works with 802.11n. I guess that’s what the “n” is for.

As the fun little pic shows, the router has built-in clients for a couple of popular Web sites, like YouTube and Facebook. That means if you have the router connected to a netbook, your netbook could be totally turned off and you’d still be able to upload content to YouTube and Facebook. Why you’d need to do that, I don’t know.

What the heck is Fonera, you ask? It’s a company that’ll sell you a router on the cheap—this new one costs $99—on the condition that you share your Internet connection with other Fonera users, thus building a mini Fonera Internet. Sorta. You know what I mean. Again, I haven’t seen too many of these here in the U.S., but, for example, I’ve never been to tech-crazy San Francisco in my life. Maybe it’s big out there?

As you recall Fon makes wireless routers for sharing. You install the Fon node in your house, share it with others, and then are given access to other Fonera routers around the world. It’s sort of a viral Wi-Fi community.

Now, however, the Fonera is incredibly more interesting. The device can now access web services without the aid of a computer, allowing you to download torrents and “content” as well as upload to multiple services just by plugging in a USB key. The router also can be used as a webcam or print server and can connect to a 3G or HSDPA node and share the connection over Wi-Fi. It also supports 802.11n and acts as a wireless NAS with remote browsing capabilities. In short, the router just got much smarter.

The router is now basically a small computer. The 2.0 has been in beta since October and has an applications development platform for hackers. The current applications include:

1. Finder for Fonera 2.0: App that will allow you to navigate though the USB Hard Disc on the Fonera 2.0 from any Mac/Windows computer.
2. GSpace for Fonera 2.0: App that will synchronize GSpace 2Gb data with your Fonera 2.0 USB Disk GSpace Folder (www.getgspace.com)
3. Backup Application: Auto-Backup application with MAC/Windows/Linux client that will automatically incremental backups of your notebook when you get connected to Fonera 2.0
4. Azureus Client: App that will allow you to manage your BitTorrents from your Fonera 2.0
5. UMTS Modem Support: App that will allow you to use a USB HSDPA modem to connect to the Internet and then send WiFi for your devices to connect to it. Ideal for Nintendo and PSP addicts!
6. YouTube uploading tool: Get your video into the USB HDD on your Fonera 2.0 and close your computer, all the long uploading will be done by this App on Fonera 2.0 and you save power!
7. USB Audio Support: App that will allow you to add a small USB Audio Card dongle and stream your music from your Fonera 2.0 to your HiFi.

The device costs $39.95 for the Fonera+ model and includes three weeks of free Fon access so you can use Fon hotspots around the world while you wait. You have complete control over how much bandwidth you’re willing to share.

PSP fanboys, take note. Starting today, your little Sony buddy can hop on any of the FON Wi-Fi spots. Details aren’t exactly clear as if full internet will be available or if it is just going to be Sony-exclusive material. As far as the service goes though, there are around 44,000 FON spots world-wide so chance are that unless you’re in the middle of the a corn field, there is probably a FON spot by you. 

Any PSP users care to give us a little hands on the new service? Pics and thoughts in the comments.

Ready for worldwide, wireless Internet access? Keep dreaming!

You remember FON, right? There’s a small piece in the International Herald Tribune that tries to explain why the hippie-sounding service hasn’t taken off yet. Whereas, to be successful, FON needs millions of users spread around the world, each sharing their Internet connection wirelessly, so far only 830,000 people have signed up; only 340,000 hot spots are currently in operation. If not enough people run a hot spot, FON dies, as does the idea of free, worldwide wireless Internet access.

But wait! Not every worldwide wireless Internet scheme depends on the kindness of strangers. Let’s not forget WiMax and LTE, two technologies bandied about by the likes of Sprint and Altel. Unlike FON, depends upon people sharing their Internet connection, WiMax and LTE are corporate-controlled “pay-us-$n-per-month-and-you-can-tap-into-the-signal” entities. That type of oversight makes some business types comfortable, but annoys the FON guy, Martin Varavsky.

So yeah, enjoy your Memorial Day, my fellow Americans.

via Drudge Report

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).

So, yeah, basically it’s a photoblog. You can easily set it up to automatically send your messages to Twitter and Facebook too, though, which is useful. My Twitxr account is here. Here’s an example of a message that was copied over to Twitter. Another feature I like is the fact that you tell it where you are, so location information is included.

Varsavsky says it’s specially designed for the iPhone, and they’ve created software that makes uploading text and a photo from the iPhone very easy. As a third party application, though, it isn’t officially available for the iPhone. You have to “jailbreak” the phone before you can install their application. It looks like you can’t simply grab a photo that you’ve taken normally from the iPhone, either. You have to initiate the photo through the Twitxr application. The application automatically adds location information to your photos and updates.

Twitxr is the upteenth variation of Twitter to appear (see Jaiku (acquired by Google), Pownce, etc. One clone has even gone to the deadpool. This isn’t even the first Twitter-variation to include photos – see Zannel . This is something Dave Winer has been working on with his FlickrtoTwitter project as well – which sends links of your new Flickr photos to your Twitter account. And photoblogging is nothing new. So as pretty as Twitxr is, perhaps FON should stick to wifi.

Update: I’m actually going to re-jailbreak my iphone to test the software – the fact that uploading is so easy and it adds location information is worth noting. If it works really well, this could actually be a reason for me to stop posting directly to Twitter.

“Give to receive” is the mantra of a new initiative by Spanish startup Fon to bring “free” Wi-Fi to the residents of San Francisco’s Castro District.

The plan is the same one tried by Fon elsewhere: the company gives people Wi-Fi routers to install in their homes with the understanding that they will use them to share some of their internet connection with other Fon users (so-called “Foneros”). The routers emit two types of signals: one for private usage and the other for secure access by fellow Foneros. Share some of your own internet connection and your neighbors will share back, effectively expanding the geographic area of the internet access you pay for.

The scheme has recruited over 635,000 users in Europe, Asia and America despite the bans many ISPs place on sharing internet connections. Fon is conducting this San Francisco effort with the support of the San Francisco Bay Guardian and will make money off the program after they stop giving the Wi-Fi routers away for free. If you do end up paying for a Fon router, you’ll have the chance to recoup your money (and maybe make a profit) through the proceeds of FON Access pass sales.

Fon joins Meraki in the attempt to bring widespread Wi-Fi to San Francisco after Google and Earthlink failed to do so themselves. Meraki’s strategy differs from Fon’s in many ways, particularly in its ad-based monetization strategy.

Did anyone else get a free FON router a few months back? I did and it’s a piece of turd. Mine was constantly cutting in and out and the router started warping from the heat. I think it’s a dumb idea to share my Wi-Fi, but I’ll probably sing a different tune the next time I’m traveling and need a hotspot to mooch off of. Today FON have teamed up with British Telecom to cover all the UK with BT FON hotspots and now those 3 million broadband customers under BT’s belt have gained free Wi-Fi across the entire isle, which has essentially become the largest Wi-Fi community in the world. I just wish this deal had gone through while I was there. Oh well.

BT AND FON LAUNCH THE WORLD’S LARGEST Wi-Fi COMMUNITY

BT and FON today promised to transform the UK’s market for wireless broadband by launching BT FON, the world’s largest Wi-Fi community.
BT’s more than 3 million consumer Total Broadband customers will be invited to join the global community of people sharing their broadband.
At launch, new members will be part of an existing community of 500,000 members and will have access to more than 190,000 FON hotspots worldwide. Anyone joining in will be able to use those FON hotspots across the world and all the new BT FON hotspots free of charge.
The revolutionary idea for a massive Wi-Fi community, built by individual people and not a large corporate enterprise, marks BT’s boldest step yet in building extensive broadband coverage outside of the home or office.
Every person who agrees to share a small portion of their home broadband connection, by opening up a separate, secure channel on their wireless router, will be able to share the connection of any other member. BT Total Broadband customers will also be able to use BT’s premium existing hotspot network BT Openzone, including 12 Wireless Cities.
BT FON aims to build a huge community Wi-Fi network, covering hundreds of thousands of hotspots, in a short space of time, under the slogan “Wi-Fi for everyone, I’m in”. The secure open Wi-Fi solution was developed by FON and BT’s research labs. BT has invested in FON as part of the tie-in, joining the company’s other investors, which include Google.
The BT FON deal will accelerate and complement the work BT has already done with BT Openzone in order to provide the largest possible Wi-Fi coverage across the UK and the rest of the world.
Gavin Patterson, BT Group managing director, Consumer, said: “This is the start of something very exciting for BT. Today we are launching a people’s network of Wi-Fi, which could one day cover every street in Britain.
“We are giving our millions of broadband customers a choice and an opportunity. If they are prepared to securely share a little of their broadband, they can share the broadband connections of 190,000 others without paying a penny.
“We have built a public Wi-Fi network and 12 Wireless Cities already, but today we are saying to customers, let’s build a Wi-Fi community together, which covers everywhere and serves everyone.”
Martin Varsavsky, FON’s Founder and CEO, said of the strategic partnership: “BT is a fantastic addition to our roster of investors and highlights the on-going success of FON, the enormous support from ISPs and Telcos around the world and the strength of our vision to establish shared Wi-Fi access worldwide. From the beginning FON users believed in the concept of sharing and in the peoples’ ability to participate in building something important that would benefit everyone. With BT FON, those beliefs have proved to be well-founded.”

Buying customers is never a good thing if you can avoid it. Fon might need to do another round of fund-raising to pay for this deal. The $35 million it’s raised so far from Google, Skype, Index Ventures, and Sequoia, among others, might not be enough, especially if it cuts more sweetheart deals with other telcos around the world.

But here’s the really screwy part: BT is also now an investor in Fon, according to founder Martin Varsavky. So at the same time that it is presumably putting money into Fon with one hand, BT is about to potentially extract millions of dollars out of Fon with the other. I say presumably because it is possible that BT did not even put any cash into Fon for its stake in the first place (terms were not disclosed). Often in these deals, as the price of admission, the telco demands not only cash from the startup but an equity stake as well. In the telecom world, some things are never free. (Update: Rees says BT did invest cash. So maybe the deal isn’t so screwy, after all.)

Most ISP service agreements still ban customers from reselling or sharing their broadband connection. But Fon is convincing some ISPs that it might actually be a selling point to be able to tell customers that included in their home broadband bill is access to free WiFi when they travel across town or across the world. Fon claims its network of WiFi hotspots is already the largest in the world. Investors in Fon include Google, Sequoia Capital, and Index Ventures, and now BT as well.

Any questions?

You have to plunk down $39.95 for a La Fonera router, but joining the Foneros (community members) lets you connect to any member’s Wi-Fi hotspot for free around the globe, wherever there’s a participating ISP. The La Fonera router uses two separate Wi-Fi channels: one for the owner, one for Foneros. Public and anonymous users cannot access the encrypted Fonero network.

Want to find out where you can connect if you become a Fonero? Check out Fon Maps, a Google-Maps mash-up that lets you pinpoint access points, as in the image above.

Time Warner customers get Wi-Fi hotspots [Yahoo! News]