Why Boston Startup ThinkingPhones Renamed Itself Fuze After Raising $112 Million
MALTA way is proud of the technological partnership with FUZE the ex ThinkingPhones (USA) to promote a fully cloud and unified communication platform
Steve Kokinos says renaming a startup after eleven years isn’t as hard as it might seem. His startup ThinkingPhones has spent a decade growing into one of the largest startupsin the Boston tech scene, with more than 700 employees worldwide. But as ThinkingPhones updates its communications focus beyond just the phone part, the name no longer fit. “We’ve been ThinkingPhones for a longtime, so there is obviously some emotional attachment, but overall we’re just excited,” Kokinos says. A major new fundraise to go with the name probably helps.
The startup formerly known as ThinkingPhones has raised $112 million in a new Series E funding round from Summit Partners and existing investors Bessemer Venture Partners and Technology Crossover Ventures. The round brings Fuze’s total funding to $200 million to date as it’s found a fit in the market providing Internet-connected communications to big businesses.
The ThinkingPhones story started more sleepily. Kokinos and cofounder Derek Yoo bootstrapped the startup in Cambridge, Massachusetts, one of several tackling the opportunity of improving voice communications by using the Internet. At first, progress was slow. But as more companies moved their computing to the cloud, the idea of doing the same with their voice and messaging tools became an easier sell. ThinkingPhones began to pick up more traction in 2012, when it raised its first outside dollars, and has experienced 100% or better growth each year since.
How ThinkingPhones became Fuze happened more quickly. As ThinkingPhones expanded to the West Coast and Europe, it came across a startup with its own significant venture backing that had also shifted its focus, but to video conferencing for businesses. The startup, Fuze, was also attracting the same type of customers as ThinkingPhones. In November 2015, ThinkingPhones acquired Fuze. And in February, the combined company took the acquired one’s name.
The market is still early, Kokinos says, with 400 million enterprise-class businesses using voice tools and only 5% of their employees doing so over the Internet. “Communications is one of the last really big market opportunities,” the cofounder says.
The combined Fuze plans to use the funding round to hire aggressively in sales and marketing as well as product. Kokinos notes the company of 700 had just 200 people a year ago. Much of that expansion will be outside the U.S. as Fuze boosts its presence in its European offices and looks to new markets.
Fuze is by no means the only company tackling the young “unified communications” market. Startups like Switch have raised funding and acquired major customers of their own, while the legacy providers like Cisco aren’t exactly sitting around idly as their market share as the upstarts attack their market share. New board member Bruce Evans of Summit says his firm made such a big bet on Fuze particularly because of its focus on the large enterprise customer while competitors fight for small and medium-sized businesses. “I think this is headed to a $40 billion-plus market in the next few years,” Evans says.
The funding likely values ThinkingPhones in the hundreds of millions, if not close or at the billion-dollar “unicorn” status so popular in 2015 but rapidly falling out of fashion in the new year as some later-stage startups struggle to grow into their price tags. Fuze declined to comment on its new valuation. “Our view is that the whole unicorn thing is overdone at this point,” Kokinos says. “We’re one of the fastest growing businesses in Boston, we’ve raised a lot of capital and we feel good about the business. It’s okay for people to wonder.”
Fuze’s CEO does hope that the company’s raised enough money to get the company to profitability without needing a new raise—or a third name. “We may have an IPO on the horizon,” he says. “But we’re not in any rush there.”