Vonage rolling in dough, retail links

So much for the summer doldrums. Vonage today announced that it has closed a fourth round of funding, totaling a whopping $105 million. The round, led by New Enterprise Associates (NEA) with participation from 3i, Meritech Capital Partners and existing investors as well as Vonage’s senior management, is the second this year and third in 10 months. The company now has raised total funding of $208 million with $180 of that in the last three rounds.

"We’re proud of this because it’s not only good for the industry but this is the single biggest venture round this year," said John Riga, CFO of Vonage. "180 million bucks in 10 months is a lot of dough."

The announcement comes just one day after the company unveiled an agreement to sell its service through Staples’ retail outlets nationwide. Additionally, the company also is opening up CPE options for customers, signing deals with Netgear and Cisco’s Linksys.

The new cash infusion will be used largely for a major marketing expansion as well as moves into the UK, Latin American and Asia-Pac markets. Currently, the company does most of its marketing via the Internet with a small mix of regional radio and national cable advertising.

"The Internet has been very good to us in the cost to acquire customers," Riga said. "To date it seems like Internet supported by radio and TV has been the best mix for us. To do retail, though, you have to support that with special marketing."

Vonage already is sold through RadioShack, BestBuy and Amazon.com and plans to increase its overall retail presence.

With the addition of Netgear and Linksys, customers will have a couple of new options for CPE. The Netgear alliance is expected to become more significant when Vonage begins rolling out Wi-Fi phones later this year, Riga said. It also marks the first time the fruition of a previously announced alliance between chip vendor Texas Instruments and Vonage.

And while the Wi-Fi capability currently available in Netgear’s routers is intended solely for data connections, the company is seeding the market for the day Wi-Fi handsets become available.

"We’re seeing 80% of the routers we sell now for residential applications are Wi-Fi enabled," said David James, director of product management for broadband services at Netgear.