Portfolio News
Kajeet ends kids' phone wars
TechJournal South
Allan Maurer
29 January 2008
BETHESDA, MD—Kajeet, a company formed when its three founder-fathers discussed how kids, cell phones, and parents could work best, found a solution that both their customers and investors like. The company has raised nearly $64 million in venture funding and $10 million in debt capital since 2003.
Kajeet, (usually spelled with a small "k,"), launched its pay-as-you-go for kids with parental controls in 2007. It lets tweens, teens and parents configure their phones to fit their needs.
Kajeet is one of 40 innovative technology companies that will present at the second annual Southeast Venture Conference in Tysons Corner, VA, Feb. 27-28. (For more information on the conference, see: www.seventure.org).
The company's investors include Draper Fisher Jurvetson Growth Fund, Bessemer Venture Partners, Fidelity Ventures, Gabriel Venture Partners, and InterWest Partners. DFJ led the company's $36.8 B round in September 2007.
"kajeet has created a powerful wireless service that addresses the unique needs of the large and growing youth segment of the market," said Barry Schuler, managing director of DFJ Growth Fund and former chair & CEO of AOL at the time of the financing.
Founder and CEO Daniel Neal tells TechJournal South the company, which raised an additional $10 million in debt financing from Blue Crest Capital early this year, is not looking for additional capital right now. "We're not actively on the road right now, but the market is big and there's a lot of opportunity in it," he says.
"This is a market where success and growth does create an opportunity for deploying more capital."
The company sells its phones for $49 to $99. Service costs 5 cents for text messaging, 10 cents a minute for calls, and 35 cents a day for its special features. Customers can also buy packs of 200 texts for $4.99 or unlimited texting for $19.99 a month. "There are no other fees, hidden charges, or overage fees," says Neal.
The phone's features include the Configurator, which lets parents decide when kids can use their phone, and allows them to turn surfing on or off, IMs on or off, picture mail and other such features on or off. "It adjusts to your needs," says Neal.
Neal, who has substantial telecom experience, says the idea for kajeet first stuck him while he was working for Sprint in 1996-97 when he started thinking about kids and cell phones. At the time, he did not have children. But it went onto a back burner as he went off to launch U.S. Internetworking Inc., and later run VCampus Corp. a public e-learning company, and had children of his own.
"I kept thinking about it. I saw the market evolve. Three to five major players are contending for the mass market. But that leaves open these sizeable niches. Our sweet spot is ages 11-16."
The 65-employee company is not currently hiring, Neal says. "We're tightly run, lean and mean," he notes. "The only exception is that we're always looking for marketing talent."
The kajeet phones are currently on sale at Best Buy, Target, Toys R Us, CVS Pharmacies, Limited Too and other retailers.
Reception of the phone has been "outstanding," Neal says. "We had a strong holiday season thanks to our retail partners and see the potential for growth in this big, underserved market."
Neal says announcements about new features and services will be forthcoming in April.