Kik raises $19.5M round, vows OTT messaging app will remain free

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Kik Interactive has closed a $19.5 million Series B funding round earmarked to expand and monetize its over-the-top mobile messaging platform. Foundation Capital led the round, with partner Anamitra Banerji joining the Kik board of directors; original investors RRE Ventures, Spark Capital and Union Square Ventures also participated. Kik has now raised $29.1 million to date.

Launched in late 2010, the free Kik Messenger application supports chat-based conversations across platforms including Apple's (NASDAQ:AAPL) iOS and Google's (NASDAQ:GOOG) Android. Users sign in with their Kik username, not their phone number, to guarantee total control over their privacy. Kik Messenger recently surpassed 50 million users and is adding 200,000 new users per day.

Kik Messenger also integrates HTML5-powered apps called Cards. Kik CEO Ted Livingston explained that the Cards layer enables the firm to quickly create and deploy cross-platform apps within the Messenger client, allowing users to find and share YouTube videos, forward images or create sketches without exiting the Kik app. Users have downloaded more than 25 million Cards since the new feature launched last November.

Kik will now look to the Cards layer to monetize its platform. "The interesting thing about mobile messaging is that it's extremely viral, but impossible to monetize directly. If you try to sell something, users get cynical and go somewhere else," Livingston told FierceMobileContent. "What you can do is take that [messaging] app and leverage it into a platform, and monetize things around that platform. Because it's the Web, there are a limitless number of monetization options."

Asked if Kik Messenger will remain a free download, Livingston said "Absolutely. If I was a Kik user and someone told me I had to pay, I'd say 'No. I hate you. You lied.'"

Kik challenger WhatsApp offers its iPhone app for a one-time download fee of $0.99 while billing Android, BlackBerry and Windows Phone users $0.99 per year after a one-year free trial period. WhatsApp CEO Jan Koum recently said the firm will shift the iOS version to the recurring subscription model later this year. Another rival, Viber, said it plans to roll out value-added services designed to monetize its platform, but pledged its core calling and messaging services will remain free.

More than 45 percent of all smartphone owners now use some form of instant messaging or OTT messaging app in addition to or instead of traditional SMS, according to a survey conducted in late 2012 by Analysys Mason.

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