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Tango Raises $40 Million to Vie With Skype in Video

(Corrects amount and timing of last fundraising in third paragraph.)

April 19 (Bloomberg) -- Tango, a startup that offers mobile-video calling, raised $40 million from investors including Qualcomm Ventures and Access Industries Inc. to help it compete with Microsoft Corp.’s Skype service.

The service, which lets users make video calls across Apple Inc. phones as well as devices that run Google Inc.’s Android and Microsoft’s Windows Mobile software, has grown to 45 million users since it began in 2010, Bloomberg.com reported on its Tech Deals blog.

While the company hasn’t yet spent all of the $42 million it raised in July, Tango opted to raise more now because new investors offered funding at an attractive valuation, Chief Technology Officer Eric Setton said in an interview.

“There’s a lot of interest right now around mobile companies that do well,” said Setton, who co-founded the company with fellow video-technology veteran Uri Raz. “Unlike most companies in our space, we actually generate revenue.”

Setton said Facebook’s $1 billion purchase of Instagram, announced last week, helped raise investor interest in mobile applications.

Tango would not disclose its valuation, which was at $160 million when it took funding last year, two people said at the time. Setton also would not specify how much the startup has made by selling extra storage for video calls and animations that play on the screen during calls.

When Tango began offering its app for Microsoft’s Windows Mobile phones last year, it became the first video-calling service to span all three major mobile platforms. It’s still the only mobile video service to do so.

Microsoft, based in Redmond, Washington, paid $8.5 billion last year for Skype, gaining a service that provides mobile-video calling.

To contact the reporter on this story: Douglas Macmillan in New York at dmacmillan3@bloomberg.net

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

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