Zipwhip Nabs $9 Million in Quest To Bring Texting to Landlines
. Updated October 20, 2016.
Zipwhip, a landline text messaging service, has closed a $9 million Series B funding round for 2016. The Seattle-based company previously raised $5 million at the start of 2015, and the latest round was organized by Voyager Capital. Microsoft Ventures is involved in the round as well, as are GCI and Inteliquent, to help Zipwhip develop, “a strategic edge with new distribution opportunities.”
Zipwhip’s CMO John Larson told Geektime that the money “will be used to grow the sales force similar to the $5 million we raised in January 2015, but roughly half of it will also be used to advance the product.”
“Businesses are signing up with Zipwhip because they want access to a complete texting solution to communicate with customers, not a private messaging app,” John Lauer, the company CEO, noted in a press release. The company maintains a very strong position in the industry, which will serve it well as it contends with moves made by tech giants Facebook, AT&T, and Salesforce to get in on the market.
Any US carrier can receive texts from Zipwhip’s virtual SMS client. In 2014, it enabled landline text services for business clients, also encompassing voice-over Internet Protocols (VoIP) and toll-free numbers. According to consumer survey data gathered in 2015, 64% of consumers, prefer texting to calling for customer service, so there is a real demand for the cloud-based startup to streamline what is often a very unpleasant and tedious process over the phone with dropped conversations, wait times, and call transfers.
In addition to private users and companies, the application-to-person model has also been tested for emergency hotlines. Picture messaging was introduced in 2015, and the mobile network provider AdaptiveMobile has been brought in to improve data security.
A subscription, now available in the US and Canada, costs $19.95 a month at the base rate: more expensive options allow for group texts and auto-replies. The company has found that as it developed the service, nearly half of users use the service on their desktop more than their mobile devices, though their web app remains users’ most popular choice.
Currently, Zipwhip partners with Frontier Communications. Frontier Texting, the telecom’s business communications application, is powered by Zipwhip.
The text services that Zipwhip provides help legacy carriers offer new services on old lines in this climate. “Carrier channels like Frontier Communications are looking to add more value to that phone line,” Zipwhip told Geektime, “They envision a world three years out where every business phone number has text capability.” Zipwhip expects that the service will become an integral part of Frontier’s wireline bundles in the near future.
Frontier recently expanded its national operations when it acquired Verizon’s landlines across several states, but suffered criticism over the Verizon deal from both regulators and investors who are concerned about how it can build this into long-term growth. As noted above, by adding value to these existing lines, wireline carriers will be better placed to cope with changes in the industry. “Consumers continue to shift to mobile-only, but businesses still operate with a phone number” that they would like to retain for convenience and affordability, including many smaller and mid-sized businesses.
Zipwhip’s relationship with the “Big Five” mobile providers -- AT&T, Verizon, Sprint, US Cellular, and T-Mobile -- give it a major advantage in the field. Some of these carriers have caused disruption in the landline texting market with their fee policies, and SMS texting is a communications spectrum that, legally speaking, is still a new frontier for regulators.
Other landline text messaging companies have even petitioned the Federal Communications Commission (FCC) to force greater interconnectivity across the industry, blaming Zipwhip for technical and legal issues surrounding dropped calls and pricing disputes, charges that Zipwhip disputes. Zipwhip told Geektime that, “We’ll continue to work with the industry including [the Cellular Telephone Industries Association,] CTIA and the FCC to try to make sure everything runs smoothly.”