Rave Unwires Colleges

With every teenager sporting a cell phone these days, the college dorm phone is quickly being relegated to the closet. Rave Wireless, a New York city-based startup that makes mobile software, saw this coming, and has started creating applications for cell phones that could help college kids wirelessly manage their social and academic lives.

Rave co-founder and CEO Rodger Desai says the company will launch with 15 universities for the Fall school year and another 20 or so in the months after that. The company already runs its service at Montclair State University in New Jersey, which the AP talks about a bit in an article this weekend. With the way things are moving along, he says the company will be profitable by the end of next year. The company uploaded a promo video on Google video this morning.

To meet that time frame, Rodger’s been busy signing up universities like Georgetown, doing deals with all the carriers, and even has the ear of Microsoft, who wants to get its software on college kid’s phones. That’s because the company has a savvy business model–position itself between these three deep-pocketed giants, and get parents of the college kids to cover the cell phone bill. Now that’s smart. The company does a deal with a carrier, which can build out the cellular network around the school, ensuring students can get phone coverage. Microsoft, the universities and the carriers are desperate for ways to reach these young mobile subscribers. Parents just want to be able to reach their kids.

The company’s service creates mobile channels that can be used by the university to send messages and updates to students. Students can use the service to socialize with each other. One of the more interesting applications the company has developed is a mood-based presence function. A student can set messages such as “I’m bored,” or “I’m hungry,” and these messages can be combined with GPS-based location services that help you find close-by friends that feel the same way. Another application somewhere down the road could sync with connected laundry machines that alert the students to open washers and dryers, or when your laundry load is done. A few months ago I talked with a student who was writing a mobile blog he called “Bored in the Dorms.”

Out of the 15 universities that will launch in the Fall, 6 of them require students to purchase a Rave-managed cell phone. When colleges mandate that students buy cell phones with the Rave service, the company gets a deal that can be worth around $2 million. That’s a nice deal, but the downside is that Rave has to open a store on campus to manage the handsets, which can cost significant capital.

When the college doesn’t mandate a phone, but decides it wants the service as a mobile option for students, the deal is more like $500,000. With that option the university and students still have access to all the mobile campus channels, just over student’s personal phones. To do all this, Rave has already raised $17 million from venture firms like Bain Capital Ventures, Sigma Ventures, and RRE Ventures.

The biggest hurdle to Rave’s service could be the students themselves. Mandatory phones, and universities sending you messages, doesn’t always equal cool-factor. College-backed digital music services haven’t gained popularity when there’s hipper alternatives nearby. While Rave and the VCs invested want the service to be as popular as Facebook is for colleges, a top-down approach might not be the most direct way to gain student’s favor. There’s also a lot of competition for the screen on student’s cell phones, and wireless social applications like Facebook’s mobile plans, or Intercasting’s Rabble service, could contend with Rave for most-favored status.