Samsung, Verizon rush to invest in Israel’s ‘next WhatsApp’

A $12m investment goes to Rounds, which has more than doubled its user base in six months

Rounds multi-user chat interface screen (Photo credit: Courtesy)
Rounds multi-user chat interface screen (Photo credit: Courtesy)

Israeli start-up Rounds believes it is the future of live chat – and it’s backing up that claim with a newly-announced $12 million Series B round of funding.

It’s not just the money; it’s the group behind the investment, which includes the investment groups of communications and device giants Verizon and Samsung, with the round being led by Sequoia Capital – the sole investor in wildly popular chat app WhatsApp.

In fact, according to Rounds co-founder and CEO Dany Fishel, his app may just be the next WhatsApp. Like that popular chat app, Rounds lets you set up chat groups with friends, allowing any member of the group to communicate with others at the same time, or individually. The difference is that with Rounds, users get to see their friends, since the app utilizes not only text, but voice and video as well.

Those features have impressed the executives at Samsung Ventures and Verizon Ventures, who, along with investment firms Rhodium and Draper Associates, are supplying Rounds with funds to develop new features, including adding Facebook-style games and activities to its chat mix.

“Rounds’ unique approach and increased engagement was different than any other video chat experience we’ve seen and is what triggered our belief in the company spearheading a new type of video chatting experience, one where instant conversations, fun content and pure entertainment lead the way,“ said Shmil Levy, a partner at Sequoia Capital Israel.

In its latest version, Rounds allows participants from any social network to join groups, using a special “invite code” created for each group, thus ensuring privacy while opening the chat to as many people as possible, Rounds said. There is no limitation on how many participants can be in each group and once a group member shouts-out to everyone, the first 12 to enter the call can instantly video chat. Currently, Rounds is the only “cross-platform” chat app, allowing users from Facebook, Twitter, and other social networks to access video chats.

In addition, the app features Skype-style audio and video phone calling, allowing users to call friends, while still being able to switch instantly from audio to video. This feature, “along with the existing text messaging, video chatting and the ability to enjoy social activities, games and content together, is what sets Rounds apart and offers users a real true-to-life experience, allowing users the flexibility of a text-only, audio, or multimedia video experience,” said Fishel.

Rounds, which was established in 2008, has gone through several incarnations. Originally aimed at the Facebook crowd, the app under pressure dropped a “Meet New People” feature that allowed all Rounds users — many of them teens — to instantly connect with other Rounds users. After critics said that the feature could compromise the safety of teen users, Rounds dropped it, requiring prior Facebook friendship in order to connect via the app. With the new edition, the feature is back, at least to some extent, as users can connect to anyone as long as they send them a special code, which they enter in order to join a chat group. Currently, Rounds has 25 million users worldwide, more than double the number just six months ago.

“We feel privileged to have brought on such strategic and powerful investors such as the leading venture capitalists and WhatsApp’s sole investor Sequoia Capital, the venture arm of the Samsung Group, Skype’s early investor and board member, Tim Draper, as well as Verizon Ventures and Rhodium to back us and serve as invaluable resources,” said Fishel. “With the pioneers of the mobile, consumer electronics and telecommunications space supporting our vision, we are taking the video communication space to where we believe it could and should be.”

According to Hyuk-Jeen Suh, head of Samsung Ventures East Coast, his firm “invests in companies that are paving the way for their respective industries, and Rounds has quickly established itself as a pioneer in the video communications and entertainment space. This investment is evidence of our belief in the need to bring interactive and engaging video chat to hundreds of millions of consumers who use consumer electronics devices every single day.”

Rounds has a way to go before it catches up to WhatsApp, which has half a billion users — but Fishel is hopeful. “Instead of messaging back and forth on WhatsApp, users can now instantly chat live with their groups of friends with a simple tap of a button,” he said. “While there are several video communication apps out there, we believe the ability to chat, and connect over content and shared experiences with multiple friends at a time, is a much needed and missing utility. We’ve built a thrilling and engaging product that we are very proud of, one that is changing the way friends connect and communicate.”

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