Australian listed telco ZipTel has just raised $5 million through an institutional placement.
The company has developed a mobile app which enables consumers to send text messages and make international calls for free with other users.
The share placement, which was taken up by a number of domestic and international institutions, was made up of 11,904,761 ordinary shares at 42 cents a share.
After costs of the issue, ZipTel now has cash reserves to about $8 million and the latest capital injection will be used to ramp up marketing efforts and boost subscribers ahead of the launch of its ZipT app next month.
The company’s internal testing of its communications app report voice calls are clear even on bandwidths as little as 8kbps.
Major shareholder K2 Asset Management has participated in the raising to maintain its 16.3% holding.
ZipTel’s co-founder and executive director, Keaton Wallace said the company is pleased with the investor support it’s received.
“This placement both validates our company strategy and strongly supports the development and roll out of the ZipT application and the ongoing growth of our AussieSim product,” he said.
“Through our distribution deals in place with Mpire Media and Airloyal, the funds raised will allow us to aggressively acquire an initial subscriber base for the ZipT which will in turn lead to further organic growth in subscribers through word of mouth or virality.
“With the launch of the ZipT application next month, we are another step closer to realising our goal of bringing a superior mobile based calling application, that operates all over the world under all network conditions including low bandwidth environments.”
ZipTel listed on the ASX in July 2014.