Wireless Guides Still Hot: Vindigo Receives $6.1 Million in Third Round Funding

VentureReporter.net Wednesday, May 29, 2002, 1:17 PM ET

by Rafat Ali

In midst of a depressed wireless services market, Vindigo, the Alley-based provider of wireless city guides, has received a vote of confidence from its investors. In a new third round of funding announced today, the company raised $6.1 million to expand its local area guides and services.

New Investors in this round included i-Hatch Ventures, and AOL Time Warner Ventures. Also participating in the round were previous investors. The latest round brings the company's total venture funding to about $21 million. In July last year, the company received $6.2 million from investors General Atlantic Partners, JPMorgan Partners, Flatiron Partners, Stephens' Ventures, and Gradient Ventures.

According to Jason Devitt, the CEO of Vindigo, the company had not run out of the previous round of funding closed 11 months ago, but new potential investors showed interest and the company chose to close the new round. It was a much more challenging environment for the latest round, said Devitt, as investors are scrutinizing every detail before investing.

Alley-based i-Hatch, which hadn't invested in a startup for almost 14 months, did a very rigorous "due-diligence process, which involved talking to many companies in our space, potential partners, OEMs, other companies in the value chain as well as an exhaustive review of our management team and what we had accomplished," said Devitt.

Since closing the previous second round, the company has been rolling out new enhanced subscription services, in an attempt to develop more stable revenue sources beyond the previously advertising-supported services. The company expects to be profitable by early 2003. The service is now available in about 25 U.S. metro areas and London.

"Vindigo 2.0", which debuted for Palm PDA users in March, has expanded features such as subway directions, live music listings as well as full-color maps, and costs $25 a year. Vindigo had about 500,000 users for its Palm service before it introduced the subscription version, but the company has not released details on how many converted to paid service.

"We have blown through our targets," said Devitt. "The users who have chosen to subscribe to Vindigo 2.0 have been the most active users of the original service. No surprise there, but we were surprised by how many people have made the switch."

In October last year, it also launched a similar pay service for PocketPCs, costing $30 a year. The company still has the basic free version for both the systems, but with substantially reduced service offerings.

Vindigo is also moving into the cell phone market and has been developing services based on Qualcomm's BREW operating system. It also hopes to launch a version for J2ME version of Java, which will make the service compatible with a wide variety of mobile platforms.

These cell phone services will "allow us to deliver services to phones that is almost as compelling as what we can do with the PDA," said Devitt. "At the same time it allows us to bill the end subscriber directly through their phone bills."