Vonage Secures $250 Million In Funding

Vonage have raised another $250 million in convertible debt during it’s 6th round of funding, bringing the total amount of funds raised to $658 million. Vonage will use the extra funds to build out it’s VoIP network and attract new customers to use it’s VoIP services. The new 5 year convertible notes have the option to be converted into stock should Vonage float on the stock market.

Vonage are big advertisers on the internet and offline, spending approximately $200 for every new customer they add to their list of subscribers. However, Vonage are also in the process of building in extra capacity to allow for future expansion as well as developing an E911 service to meet FCC regulations. Analysts predict Vonage will spend some $50 million in building it’s E911 service, leaving a considerable amount for development and advertising.

Rumours are circulating that Vonage may be planning an initial public offering or a private sale to another telecoms provider because pressure is growing that they should move quickly to exit as competition in the VoIP marketplace heats up. Skype was valued at approximately $79 per subscriber when it was sold to eBay, but Vonage’s 1 million or so subscribers would only be worth around $395 million.

“The capital strengthens the financial position of the company, and validates the company’s leadership in the market,” said Vonage CEO Jeffrey Citron.