VoIP startup Ooma, based in Palo Alto, has raised an additional $16 million in funding to help the company get its footing. The financing comes from existing investors Draper Fisher Jurvetson, WorldView Technology Partners, Founders Fund, WI Harper Group and Draper Richards, with new investor Telecommunications Development Fund also participating in this round.
Having already raised $27 million in funding, Ooma has had to overcome significant obstacles towards launching its VoIP service, as its main product is a physical piece of hardware that consumers purchase and install in their home in order to make free land-line calls through Ooma’s network. See here for more details on how the Ooma network leverages existing land lines in order to make free calls. While the calls are free for customers, the Ooma device itself is priced at nearly $250 (more, if you’d like to keep your phone number). This is a one-time fee, but it’s still a moderately high price to pay for an additional telecommunications device in a time when many consumers are paring down on such hardware, especially those that are associated with the phone land lines.
Ooma’s marketing and projected business model for selling accessories and additional services may need to take the front seat in order for this recent $16 million round to get Ooma in a better position. The company competes with both land lines and other prominent VoIP services already contending against land line telecommunications, including Skype and Vonage.