After meeting each other at Google a few years ago, Sara Choi and Victor Santos could have stayed on the West Coast to launch their new startup and find some investors. But they instead decided to move to Boston earlier this year to start AirFox, their new adtech venture that aims to make mobile internet affordable for people who struggle to pay for it.
Within the startup’s first seven or so months of being here, things are starting to pay off.
First, TechStars Boston chose AirFox to participate in its spring 2016 startup accelerator, ending with a Demo Day presentation in May that placed Choi and Santos in front of dozens of investors. That in turn led them to announce their next milestone on Tuesday: the closing of a $1.1 million seed round for AirFox that was led by Boston-based venture capital firm Project 11. Participating investors included Launch Capital, NXT Ventures and Techstars.
BostInno reported on the securities filing for the round, which was disclosed on Aug. 1.
AirFox shares a similar mission to Boston-based Jana, which has raised over $93 million from investors, including most recently a $57 million Series C led by Verizon Ventures, and aims to make data affordable. But there are some differences.
For one, whereas Jana provides free data to users in exchange for downloading apps or completing certain actions on apps through its mCent marketplace, AirFox plans to do this through few different products: the first one, called AirFox Sponsored Data Platform, lets users earn free data in exchange for opting in to have targeted advertising displayed on the home and lock screens of their Android phones. The two other products are an app similar to mCent that rewards users with data for completing certain actions and AirFox Zero, which will let mobile carriers provide zero-rated data for certain apps, meaning the use of them won’t count against a user’s data plan.
The other difference between AirFox and Jana is geography: While Jana is focused on developing countries (93 and counting so far, with over 30 million users), AirFox is focusing on the United States, with no immediate plans to go global. But the reason for their respective strategies is the same: helping people who struggle to pay for mobile data plans.
According to 2015 study by Pew Research Center, nearly a quarter of U.S. smartphone owners have had to suspend or cancel service because of financial constraints, and the effects are more pronounced among low-income smartphone owners, with 44 percent of those with household incomes of under $30,000 letting their service lapse. The study notes African Americans and Latinos are roughly twice as likely as whites to cancel their plans because of finances.
For Choi and Santos, that means AirFox has a mission of providing people with more economic mobility who in some cases only have a smartphone to connect to the Internet to find jobs and stay in touch with family, among other things.
The idea for AirFox actually came from Choi, whose parents came to the U.S. from South Korea before she was born, and Santos, who came to the U.S. from Brazil when he was young, experiencing the struggles of their immigrant families paying for exorbitant fees communicating with people abroad.
“One of the phenomenal things about Boston is this network of supporters,”
“We wanted to be a part of a solution that would enable anybody with a smartphone to communicate with others and the world freely,” Choi said. “Data is the key to making that possible.”
To start out, AirFox has partnered with two mobile phone carriers, Life Wireless and another one they have declined to name for now, that will see a cut of revenue for using the Sponsored Data Platform.
“Our subscribers are highly engaged. It is obvious that they find great value in AirFox’s product, as do we,” Will Curry, president of Life Wireless, said in a statement. “It is exciting and unusual to work with a company that provides immediate contributions to the bottom line. We have been very happy with our partnership with AirFox.”
Choi and Santos said they decided to move from California to Boston for a number of reasons: One, Massachusetts has a very strong presence of telecommunications companies, which has already allowed them to hire telecom vet Dan Powdermaker, formerly of iBasis and AT&T, as their executive vice president of business development; two, they got accepted into Techstars Boston; and three, Choi’s mentor from when she attended Harvard College, local venture capitalist Wan Li Zhu of Fairhaven Capital, told her about about the Boston tech scene’s strong network of mentors and advisors.
“One of the phenomenal things about Boston is this network of supporters,” Choi said.
AirFox is currently working out the Harvard Innovation Launch Lab and employs eight people.