We are happy to report that at Fon we have raised $9.5 million in a C round. Our current valuation which unfortunately I can´t disclosed has been the best valuation so far. This does not mean that we were not hurt by current market conditions which are pretty bad for start ups (Fon was founded in February 2006). Our leading investor in the round was a US Venture Capital arm of Sistema, Russia´s leading telco but our usual suspects, Google, British Telecom, Digital Garage and of course your blog writer participated in the round.

What are we going to do with the money? Launch Fon in Russia, launch the Fonera 2.0 (the fonera that uploads and downloads stuff to and from the internet while you are doing something else with your laptop) and develop the fonera 802.11n for an end of the year launch.

Unfortunately we will also have to do all this spending less money because this market forces us to do so. We already cut losses at Fon from $1.3 million per month to $800K per month in the last half year and we achieved this through cost reductions, a great reduction in router subsidies and increased revenues with high margins. We plan to do more of the same in the future and my target is to be losing half a million per month by June and to break even by the end of 09. And yes I do know that I should not be telling any of these things because we are a private company but if this blog is of any value to entrepreneurs I believe I must share them with you.

Bottom line: tough market forces you to think harder about everything you do but we are very happy to have closed this C round.

Follow Martin Varsavsky on Twitter: twitter.com/martinvars

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