Nokia takes minority stake in mobile phone payment application developer
25 March 2009
Nokia Corp., the world's largest maker of cell phones, is making a large investment in a California-based startup that wants to make the mobile phone the credit card of the developing world. Obopay Inc., a service provider for payments via mobile phones, said Wednesday it received an unspecified investment from the Finnish giant.
"This investment reflects our belief in the global potential for mobile payments. Obopay has consistently demonstrated its ability to redefine how people spend and send money and has established itself as the leader in a competitive landscape," Teppo Paavola, head of corporate business development at Nokia, said in a statement. However, he did not disclose the size of the investment, although Obopay made a regulatory filing this month for the sale of up to $70 million in preferred stock. The filing also noted that Paavola would get a seat on Obopay's board.
The investment is coming from the Finnish cell phone maker's corporate funds, not its venture arms, because Nokia wants a close collaboration with Obopay, said Olivier Cognet, a business-development executive at Nokia. Obopay had previously raised $69 million. Most of that has been from venture capital firms, though Qualcomm Inc., the developer of wireless technology, led a $7 million round in 2006.
Obopay's service, available in the US and India, lets people pay each other through text messages or other cell phone applications. The funds can come out of bank accounts or credit cards. People who lack bank accounts can prepay funds into an Obopay account.
"There's such a big gap in the world - there are 4 billion phones and only 1 billion bank accounts," said Carol Realini, Obopay's CEO. She founded the company after travelling in Africa, where she noticed how ubiquitous cell phones had become, while financial systems are still rudimentary in many places. She said that Obopay will use the minority investment to extend its product suite and enhance its global presence.