Jaxtr, We are not dead yet!

Jaxtr raised another 10 million dollars in a second round of venture capital led by Lehman Brothers Venture Partners. It brings the company’s total raised to $20 million. I was little surprised by the funding, but digging more revealed jaxtr new business model. Finally, there is a revenue generating business model. They are venturing into the international voice calling business. With the Voice widgets for social networking proving to be a failing business model , jaxtr is doing the right thing by moving towards supporting international voice calling. Apparently, cheap international calling card company IDT IDT generates around $2 Billion in revenue. This move puts them in direct competition with jajah, mig33, mobivox to name a few.

Some of the folks like Pat, Om and Luca are not really impressed with this whole deal. I partially agree with these folks on what they have to say about the product and funding in general. I have always criticized jaxtr for their lack of solid revenue generating model. So far, they have amassed a huge user based with their free beer model. I’m not sure how much money it’s generating through jaxtr café.

So enough of bitching; For a change I wanted to highlight some of the positive things about jaxtr, and why they will comeout a winner:
• Jaxtr currently has more than 10 million users in 220 countries after about a year in business. Facebook has 70 million user and they are yet to figure out a business model. Same goes with tones of other Web 2.0 startups( twitter,ning,friendfeed etc)
• Cheap International voice Calling is a proven business model. The potential is huge and has enough dough for multiple players
• Ad based voice and SMS will be successful in future
• As the founder of Linked In, Konstantine Guericke, chief executive of Jaxtr, knows and understands the dynamics of social networking.
• The new round of funding is led by Lehman Brothers, one of the top VC, which validates their product and vision
• Jaxtr café has potential to generate revenue through ads

Ok, I’m not gone talk about the downside in this article. Will save that for future. For now, I wish Konstantine and team a big success.