Despite some controversy that users’ bandwidth was sold for commercial purposes, Hola’s Free VPN network has continued to sign up more than 100K new users a day
Israeli VPN startup Hola – or as many users know it, that company behind the Hola Unblocker VPN proxy service that allows you to mask yourself as a resident of another country, such as the U.S. or UK, to access country-restricted video content sites like Netflix or Amazon – announced on Wednesday that it has raised $17 million in Series C funding.
Despite some controversy earlier this year that users’ bandwidth was sold for commercial purposes, Hola’s Free VPN network has continued to sign up more than 100,000 new users a day. Hola representatives told Geektime that while the company experienced a decline in users immediately following the news, shortly afterwards, their signups picked up pace to similar growth patterns they had experienced before Hola was accused of running its own ‘botnet,’ utilizing user bandwidth across a distributed, potentially hacker-run network.
As they say, there are no free meals.
The way Hola’s free VPN service works is that it uses P2P (peer-to-peer) technology, or user bandwidth, to power the network. This is why it’s free: In exchange for user bandwidth, which can be sold for commercial purposes, users get to enjoy free video. In general, user bandwidth can be sold for perfectly legitimate reasons, such as analyzing large amounts of data from a distributed network of idle computers for research purposes, or for less legitimate aims, such as hacking into a site like 8chan, which reportedly happened from Hola users.
Still, it seems as though Hola was able to get past this media blip and raise quite a healthy round of funding.
Why Hola was able to raise so much funding
Beyond the fact that Hola’s free VPN service has more than 52 million users, Hola’s CDN – a new publisher video distribution network – will reportedly reduce the cost of delivering video by 90% and at the same time, increase speed and reliability. Unlike regular CDNs, Hola CDN, which runs on a global network of servers running Hola’s P2P technology, streams video to viewers from various servers at the same time, also using servers in lower-cost areas.
Hola also started offering a business intelligence service called Luminati in 2014. It helps businesses do competition analysis by allowing users to unlock data that would otherwise be blocked by their competitors.
The round, led by Iris Capital and joined by Hola’s existing investors, will help accelerate their video delivery service and increase engineering and product management staff from 75 to 200. To date Hola, which Derry Shribman and Ofer Vilenski founded, has raised a total of $30 million.