Movirtu Case

Movirtu Brief

I. Background: Movirtu Business Model

Movirtu Limited is pioneering an innovative alternative approach to phone service targeted at the base of the pyramid. (1) Movirtu identified cloud-based phone service as a potentially disruptive innovation for traditional phone service in the developing world. (2) Cloud-based phone service in contrast to current landline or mobile services, meets a need for those who do not have access to traditional phone service or cannot afford to purchase, maintain, or charge the battery of a mobile phone. It also offers additional benefits for increased privacy and identity-dependent services such as banking and custom information services. Movirtu seeks to provide phone service to “phone borrowers” by partnering with mobile network operators (MNOs) in developing nations and local MNO pay phone vendors (village phone operators or VPOs). In their model, the MNO provides the mobile service and infrastructure, Movirtu provides the technology and software for cloud-based phone service (private number, voicemail, and text messaging), and the VPO provides mobile phone access to the customer at a set rate. The financial model is based on a revenue sharing approach between the three partners (Movirtu, MNO, and VPO) where Movirtu would receive approximately twenty cents for every dollar in phone calls. (1)

II. Financing

Choices for sources of funding are an important decision point for start-up businesses in both the developed and developing worlds. However, due to the inherent risk and other complicating factors at the base of the pyramid these decisions are even more difficult to navigate. In this case, Movirtu has the opportunity to apply for grants, subsidies, loans, impact investment, or traditional venture capital. Grants and subsidies can act as a two edged sword for their recipient businesses and economies. Optimistically, they can be used overcome market inefficiencies and enable businesses to...