Phone connection
Customers:
Vonage: 2.3 million, mostly consumers
Vocalocity: 21,000 business clients
Why this deal: Vonage and Vocalocity both sell Internet-based phone service. Vonage wants to reach small business customers, Vocalocity's primary focus. Vonage said the market for voice service to small- to medium-size businesses is $15 billion and comprises 32 million phone lines in North America.
Small world.
Marc Lefar runs Holmdel, N.J.-based Internet phone company Vonage, but he lives in Atlanta. Yet it wasn’t until a few months ago that he got to know about Vocalocity, the Atlanta-based startup Vonage bought on Thursday.
Now a major part of Vonage’s growth plans will be “in my backyard,” Lefar said in an interview with The Atlanta Journal-Constitution.
Vonage, a player in the consumer Internet phone business, announced its plan to acquire Vocalocity in a deal that will give Vonage a stronger foothold in voice service to businesses. The $130 million deal is expected to close before the end of the year, Vonage said.
Vocalocity, founded in 2006, provides cloud-based communications systems to small- to medium-sized businesses. The company had 21,000 customers at the end of second quarter and $28 million in revenue through the first half of 2013, up 39 percent from a year earlier, according to a news release announcing the deal.
Lefar, a former Cingular Wireless executive, said serving small- to medium-sized businesses is key to growing Vonage beyond its 2 million-plus customers. The company is also branching into mobile communications platforms, he said.
The company started discussions on Vocalocity “a few months ago,” Lefar said, and the brands and their cultures fit.
Vonage said the overall North American “voice” business for small- and medium-sized companies is worth $15 billion and comprises 32 million phone lines. Approximately 85 percent of smaller companies still get their phone service from major carriers like AT&T, Vonage said, at higher prices than those charged by carriers like Vocalocity.
Vocalocity CEO Wain Kellum will join Vonage as its president of business services. Kellum said Vocalocity plans to grow internationally but needs the scale a larger partner can provide. Vocalocity is backed by metro Atlanta venture groups including Noro-Mmoseley Partners and Imlay Partners.
The company also plans to grow in Atlanta, where Kellum said the company can find talented workers in mobility and other technologies.
“We think we have a really big market opportunity,” he said., adding that the “only way we can step up into it is with people.”
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