GroupMe raises $10.6M Series B for group text

With new funding, new board members and new employees, GroupMe moves toward a big 2011

GroupMe, a free group texting and calling service, announced Tuesday that it has closed a $10.6 million Series B round of financing from Khosla Ventures, General Catalyst, First Round Capital, and previous backers SV Angel, Lerer Ventures, and betaworks. The latter investors contributed last year to the startup’s $850,000 Series A round.

Joining co-founders Steve Martocci and Jared Hecht on the GroupMe board will be David Weiden of Khosla Ventures and Ken Lerer of Lerer Ventures.

In a nutshell, GroupMe lets you have text conversations with a group of friends. While cell phones have long had the ability to text multiple contacts en masse, replies come individually and only to the original sender. GroupMe makes it so that all messages to the group actually get sent to everybody in the group. Users don’t need a smartphone to take advantage of GroupMe. On top of that, members in a group can share conference calls together.

I’m stuck somewhere between “this is so magical” and “how did this not exist already?”

Since launching in beta at TechCrunch Disrupt in September, GroupMe has raised two rounds of funding, advanced to version 1.3 of its iPhone app and 1.1 for Android, and inspired all sorts of groups to use its new technology. Families use it to coordinate holiday get-togethers, youth football leagues use it to update each other on games’ statuses--you can probably imagine that the possibilities are endless.

But it doesn’t seem like the company wants to stay static, according to a blog post earlier this week:

"We’re going big in 2011.  We’ve got some amazing things lined up, and we consider ourselves incredibly fortunate to be assembling such a talented team."

The first thing the funding is going to is an expanded team at GroupMe, which announced the addition of three new employees on Monday: iOS developer Jeremy Schoenherr, previously iPhone development for Hot Potato, which was acquired by Facebook; Lead Product Engineer Dave Yeu, from Pivotal Labs and Limewire; and first Business Development hire Steve Cheney, from TechStars.

Before these new hires, the GroupMe team was six people strong, including the two co-founders.

What’s more curious, however, is how GroupMe will evolve and keep “going big in 2011.” After all, it’s a very simple service, and it’s hard to imagine how it could be improved.

"Of course, we still have a ton of work to do.  It was only several months ago when we showed GroupMe to the world, and we’ve only just started executing our initial roadmap. We’ve got some truly amazing product cooking."

From the perspective of the company’s investors, GroupMe needs to figure out how it plans to make money. Right now, users pay nothing for their service, so the company has zero revenue. Better start getting creative.