Fring, An Early Mover In Mobile Messaging And Video Apps, Sells For $50M To Genband To Build Out WhatsApps For Carriers

Fring, an early startup that focused on creating group messaging and video calling apps for mobile phones, competing against the likes of Skype and WhatsApp, is calling it a day as an independent entity: it has been sold to Genband, a provider of services like IP gateways and billing and other services to mobile, fixed and cable carriers.

Terms of the deal have not been officially disclosed, but we have heard from a source that the price was $50 million — a number reported also by Reuters. That represents a poor return for Israel-based Fring, which had raised around $30 million from investors including Pitango, North Bridge and Veritas. Texas-based Genband, meanwhile, had raised a huge $343 million round of funding from One Equity Partners, Sevin Rosen Funds, and Venrock in January of this year; this is its first acquisition since news of that raise broke.

So why the sale? Although Fring was one of the very first companies to offer OTT messaging and video services, it was quickly overtaken by newer competitors. Fring today has 50 million users using 150 million voice minutes and 10 million video minutes each month, CEO Roy Timor-Rousso tells me, but that’s actually fairly small compared to companies like WhatsApp and Skype (both with around 300 million+ users) and Viber (200 million users).

The news highlights what could end up being a wave of consolidation in the mobile VoIP space, Timor-Rousso says.

“I think that free mobile VoIP a very crowded space. There are a lot of services with very little differentiation among them and the technology barrier is very low, so I wouldn’t be surprised if other players in our industry will have to consolidate or find other models to operate and grow into the future. As one of the leading brands in the space, Fring took a hard look and made an active strategic decision when we did the market analysis.”

On the other side of the equation, Genband looked like an IPO target at one point after its last large raise, but it seems that for now its CEO, David Walsh (who comes from majority shareholder One Equity Partners), is looking to maximise how the company makes revenue. Fring will bring it one more product to add to its existing portfolio.

“Fring is one of the pioneers that helped change the way consumers communicate on-the-go and is perfectly aligned with our strategy to bring service providers rich, simple-to-use, mobile communications solutions,” Walsh said in a statement. Genband currently has some 700 carrier customers already taking other white-label and OTT services. “We look forward to leveraging the full potential of fring’s OTT solutions in the marketplace by pairing them with GENBAND’s cutting-edge cloud and WebRTC offerings.”

While Genband will add Fring to its existing portfolio of carrier services, Timor-Rousso tells me that Fring will also continue to offer its free iPhone, Android and Nokia apps directly to consumers. “The entire team, including Fring as a business and product offering, is migrating into Genband,” he said in an interview. “I’m leading the company with my management team. We continue as before.”

Fring will continue to introduce new features to that consumer brand, which will stay free, but Timor-Rousso calls carrier services “our growth engine, what we’ve been working on the last year or so.” For their part, carriers have been seeing people migrate to newer brands like WhatsApp and Skype and away from their own services and for the last couple of years, have been trying to create competing messaging apps to bring them back into the fold. Timor-Rousso says that Fring’s first deal resulting from that pivot will be announced next week: it will be a video and messaging app for a “tier-one European mobile operator.”

He says that Fring was not looking for a buyer, but rather a strategic partner or investor, when Genband made its offer. “Our first interaction with Genband was a customer but after we met, we very quickly understood that we had aligned strategies, so that conversation quickly switched into first investment and then a full acquisition offer.”