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Video Chat Startup Rounds Raises $12 Million

Mobile messaging was a great bet. Why not video messaging?

Rounds, a Tel Aviv-based video chat startup, has raised $12 million in new venture funding, according to CEO Dany Fishel.

The round was led by Sequoia Capital, and includes additional investors like Samsung Ventures, and existing backers Verizon Ventures and Rhodium. Rounds has now raised more than $22 million since its launch in 2009.

There are a few things that set Rounds apart from other video chat services like Skype, Google Hangouts or Apple’s FaceTime. For starters, Rounds allows users to set up video chats with as many as 12 people (Hangouts allow 10) and works on both iOS and Android (unlike FaceTime). Rounds also enables users to do things like play games or watch YouTube videos together while chatting — in fact, 94 percent of conversations include some kind of extra media component like this, says Fishel.

Despite those interactive capabilities, however, Fishel says the app is focused solely on consumer conversations, not business-related uses such as meetings or presentations. Building a business product seems like it could open up revenue opportunities for Rounds, but Fishel says he wants the app to be about “fun and entertainment” instead.

With more and more people on smartphones, and text-based messaging from services like WhatsApp and WeChat on the rise, Rounds is hoping to capture some of that momentum with an alternative, video-focused app (although that space is getting crowded, too). Rounds has 25 million registered users, although those aren’t the same as active users that companies like Facebook and Twitter report.

Fishel plans to use the funding on research — he wants to discover what types of games and features keep people using the service — and to open a U.S. office at some point in the future.

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