Tango Video-Chat Service for Smartphones Said to Be Valued at $160 Million

Tango, a service that lets users make video calls from their smartphones, received about $30 million in a round of funding that values the startup at $160 million, two people with knowledge of the matter said.

Investors include former Cisco Systems Inc. executive Daniel Scheinman, investment banker Bill Hambrecht, venture capitalist Bill Tai and entrepreneur Michael Birch, said one of the people, who asked not to be named because the funding was confidential.

Founded in 2009 by video-technology veterans Uri Raz and Eric Setton, Tango has attracted 15 million users to its free application, which runs on Apple Inc. (AAPL)’s iPhone and other camera- equipped smartphones. It competes with Apple’s own app and Skype Technologies SA in the surging market for free video calls made over mobile devices. Microsoft Corp. (MSFT) agreed to buy Skype for $8.5 billion in May.

Jennifer Nielsen, a spokeswoman for Palo Alto, California- based Tango, declined to comment on investments in the company.

Tango raised $5 million last October from investors, including Scheinman, Hambrecht, Tai and Birch.

The company first released its application in Apple’s App Store in September, signing up more than 1 million people within 10 days. Since then it has introduced versions for handsets running Google Inc. (GOOG)’s Android software, including HTC Corp.’s ThunderBolt. Tango’s users are now split evenly between Apple and Android, the company said.

Apple helped popularize mobile-video calling with the June 2010 introduction of the iPhone 4, which has a front-facing camera. Apple offers its own videoconferencing software, called FaceTime, though it only works over Wi-Fi connections, rather than mobile-phone networks, and only with Apple products.

In contrast, Tango works over phone networks and lets people call each other using smartphones running different operating systems.

To contact the reporters on this story: Douglas MacMillan in San Francisco at Dmacmillan3@bloomberg.net; Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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