Kajeet, the cell phone service provider for kids and tweens, closed a $1.05 million second-round of venture backing to continue product and market development. The Bethesda, Md.-based company is coming off a big win last week, striking a deal with Amazon to sell its phones through the site’s wireless store (it also landed a coveted spot on Amazon’s holiday toy list).
It’s currently selling four different youthful models on the site — built by Samsung, LG and Sanyo. But it’s really the operating software — fully loaded with parental controls and age-appropriate applications — that tailors them to kids and teens. For example, the phones allow parents to manage their kids’ contacts and even block calls and texts from non-approved numbers. They can also restrict the times phones can be used and tap into a GPS locator to track their kids’ whereabouts at all times.
There is also a unique financial aspect to Kajeet’s service. It doesn’t use contracts; users pay for minutes as they go. You just add a credit or debit card, or PayPal account, and either set up automatic monthly payments, or manually refill minutes on the company’s web site. There’s an educational component in all this. Kajeet’s WalletManager application allows parents to split service fees with their kids, in an effort to teach budgeting and fiscal responsibility.
This is all well and good, but it seems like all the mobile heavy hitters are developing similar programs these days — with goliath marketing budgets to boot. AT&T has its Smart Limits service, allowing parents to filter web content, texts and calls. Verizon’s Usage Controls does the same, and puts strict limits on how many minutes kids can use. And Sprint has its own suite. The major difference between these and Kajeet, is that they are still usually contract-based.
Capitalizing on one primary focus may help keep the company afloat (as well as offering much more affordable prices — ranging from $29.99 to $119.99 on Amazon). The deal with Amazon is certainly indicative of traction, and an ability to clear the hurdles that downed its predecessors. And Kajeet has the money to keep growing. Before the recent round, it had raised $68 million from DFJ Growth Fund, Bessemer Venture Partners, Fidelity Ventures, Gabriel Venture Partners and InterWest Partners, as well as an additional $10 million in venture debt from BlueCrest Capital Finance.