It has only been four months since we reported that Boku, a mobile payment service used on Facebook apps and elsewhere, had taken a $25 million venture round. Yet it’s already back with another investment, an undisclosed amount from prominent new venture firm Andreessen Horowitz.
Boku’s total capital raise before this round was $40 million, leaving it comfortably capitalized. The real reason for taking on more money, according to co-founder Ron Hirson, was to get access to Marc Andreessen and Ben Horowitz, the two respected Silicon Valley personalities who head the venture firm. “They’re the smartest guys in the Valley,” says Hirson.
That reasoning is reminiscent of comments we’ve heard from Zynga, another of the firm’s portfolio company. Andreessen also serves on Facebook’s board, and both venture capitalists are well connected throughout the area.
Along with the investment, Boku also brought on two new executives. David Yoo (pictured to), who was Hirson’s direct superior at AT&T Interactive, will be Boku’s new senior vice president of strategy, while Kevin Grant, who previously worked at SBC Global and MobiTV, will head up carrier strategies, working to bring Boku more international deals and negotiate with carriers at home.
The latter duty is key to Boku’s future — today the company can take mobile phone payments in 61 countries, but part of its competitive race with companies like Zong is adding more as quickly as possible. Another part of the puzzle is convincing carriers in the United States to charge less for small transactions. For now, the mobile carriers still charge large flat-rate fees, which were born out of the ringtone market.
Hirson says that his company is likely to convince the carriers to start bringing down the fees within the year. “We have the biggest Facebook games, the biggest gaming companies, dating sites, and e-card sites. What’s that given us is a data set and use case that we can take to carriers,” he says. “Eventually, the strategy is to enable anyone to buy anything around the world.”
Another thing Hirson expects to begin this year is a drastic slimming down of the mobile payments market. “By the end of the year we’ll see the long tail companies start to fail or be picked up, and clear leaders will have emerged,” he says. “I’m talking one or two in each category.”