Funambol Raises $12.5 Million Series B: AOL Signs Up As Customer

By taking an open-source approach to mobile mail and contact syncing, Funambol is cracking the problem of creating applications across 850 different mobile handsets. The company raised $12.5million in a series B financing led by Nexit Ventures. Castile Ventures and existing investors Walden International and H.I.G Ventures also participated. Funambol previously raised $5 million in a series A in August, 2005, and then a previously undisclosed follow-on of $5.5 million in December, 2006. The company is also in the process of raising another $2 million in venture debt to bring the total capital raised to $25 million.

The company is based in Redwood City, California, with most of its employees and development engineers located south of Milan, Italy. (Of the company’s 75 employees, 45 are in Italy). It is behind one of the largest mobile open-source projects. Its syncing engine has been downloaded more than two million times by developers. Funambol’s syncing software works on phones running Symbian, Windows Mobile, OS X (the iPhone), Jave ME, Mobile Linux, Blackberry, and Android. The community edition that Funambol supports works with Exchange, Domino, POP and IMAP email servers. CEO Fabrizio Capobianco explains:

There are three billion phones you need to make work. It is very complicated. You’d need thousands of employees. We solve this with open source. We have 1,000 people per country make our application work.

He is even creating an iPhone app that will essentially offer a free version that partly replicates some of the main features of Apple’s new MobileMe service. How does he plan to make money? Selling the community edition of his syncing server to ISPs and email providers like AOL, which will be using Funambol to synchronize mobile and online messages. He thinks a messaging app, not a mobile Web browser, is the best place to show mobile ads to consumers. Capobianco says:

The real focus is ad-based mobile messaging. It is an untapped market. It is huge. The mobile messaging client is the most used client on the device. It is a communications device—you either talk or you message. So that is the best conduit for advertising.

He figures that with as little as ten emails a day, that generates 30 impressions a day, or about 1,000 a month, which is a CPM (cost per thousand—the metric used to measure online ads) Each mobile subscriber in his eyes is a CPM, and he says he can get $15 to $20 CPMs today. And he splits that three ways with the service provider and the ad network supplying the ads. Stll, with mobile those numbers can add up fast.