Truecaller Maker Gets Backing From Sequoia -- Update

By Dow Jones Business News, 
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By Sven Grundberg

STOCKHOLM--The Swedish company behind the Truecaller phone-number identification app has attracted a large equity injection from Silicon Valley investor Sequoia Capital in a funding round that values the still-unprofitable company at $80 million.

True Software Scandinavia AB, the five-year-old company that makes the mobile caller ID app, said Thursday it collected $19 million from investors, with most--$15 million--of the backing coming from Sequoia. People familiar with the terms of the deal said the investment is based on a valuation of about $80 million.

Sequoia is well known as a provider of early-stage capital in Apple Inc., Google Inc. and other tech giants. Although Truecaller was first launched in 2009, its user base has ballooned recently, especially as smartphone users in emerging markets look for accurate and comprehensive caller-ID services.

Sequoia couldn't be reached for comment.

Truecaller works like a Wikipedia for phone numbers, letting users draw on and help build a growing global directory of phone numbers. True Software Scandinavia said it has been instrumental in helping cut down suspected fraudulent schemes.

Founded by Nami Zarringhalam and Alan Mamedi when they were newly graduated engineering students in Sweden, the company posted modest growth in its initial years. But downloads took off in the past year, growing from 8 million at the beginning of 2013 to 45 million as of February 2014.

True Software Scandinavia took in an initial $1.3 million round of funding in 2012, and will use the new funds to fuel expansion. "Up until now, we haven't given much thought about monetization," Mr. Mamedi said in an interview. " We're focused on growing."

The little revenue the company currently generates comes from Truecaller downloads--the premium version costs 99 cents, and an advertising-based alternative is free. The company hasn't disclosed the share of premium users.

True Software Scandinavia's revenue doubled to about 12 million Swedish kronor ($1.8 million) last year from 6 million kronor in 2012, when it lost about $2.2 million, Mr. Mamedi said. It remained unprofitable in 2013.

One of Truecaller's most appreciated features is its blacklist, a function that automatically block calls from known con artists, from fake telemarketers to so-called "one-ring" scammers. In less than a year, the company has blocked one billion unwanted calls world-wide, and that is largely a result of its active community flagging numbers as scam, Mr. Mamedi said.

The one-ring scam has affected a number of people in the U.S., who get charged by scammers when they return calls to unknown--but premium--numbers.

Other frequent scams include instances of telemarketing fraud, where phone users are told that they have won prices, but need to pay for shipping.

Truecaller sources its phone directory from its users, as well as by joining with yellow and white pages around the world. It has grown especially fast in places like India and developing countries in the Middle East, where up-to-date phone directories for both individuals and companies are hard to get. Truecaller estimates 25% of Indian smartphone users have installed its app.

Competition, however, is heating up. When Google last year rolled out the latest update of its Android operating system for phones, it included a built-in caller identifier that sources data on enterprises from its search engine. Google's caller-ID tool, however, is only available on the company's own line of Nexus phones, whereas Truecaller is available on all mobile platforms, including Android, Apple's iOS, Windows Phone and even Nokia's old Symbian OS.

"For long, we were alone doing this, and I honestly think it's a good thing to finally get some serious competition from a big company. It keeps us motivated," said Mr. Mamedi.

Write to Sven Grundberg at

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