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Mobile phone entertainment distributor PlayPhone Inc. will redouble its efforts with an unexpected $18.75 million third round of venture funding, twice the size of the company's second round last summer.

Scale Venture Partners of Foster City, Calif., showed interest in backing PlayPhone last year, then arrived with an offer for an early Series C round that was completed "in record time," according to PlayPhone CEO Ron Czerny.

Existing investors Menlo Ventures and Cardinal Venture Capital, both of Menlo Park, Calif., provided additional capital in the round.

Czerny said Menlo outbid Scale for the lead role in PlayPhone's second round, completed in July 2006, but that Scale was involved "all the way to the end." Although he said PlayPhone still has much of the second round in the bank, the company has accelerated its drive for international expansion and sought additional money for marketing and infrastructure growth.

Although he would not comment directly on PlayPhone's valuation, Czerny suggested that the deal was based on a figure consistent with the company's revenue growth. Scale managing director Sharon Wienbar said PlayPhone was "a lot smaller" at the time of the second round as well.

Although Scale's pursuit of PlayPhone resulted in the deal's quick completion, Czerny said others who had shown interest in the second round were contacted prior to the completion of the third.

PlayPhone distributes ring tones, games, graphics and text-based entertainment for mobile phones. The company sells directly to consumers, both via its own branded Web site and through distribution partners such as the Real Arcade site maintained by Real Networks Inc. of Seattle and the Sega Mobile division of Sega Corp. of Tokyo. PlayPhone also maintains relationships with content providers such as record labels, which supply ring tones.

The wider distribution strategy through multiple channels differentiates PlayPhone from competitors such as Thumbplay Inc. of New York; Jamster, a joint venture between News Corp. of New York and VeriSign Inc. of Mountain View, Calif.; and Blue Frog Media Inc. of Seattle.

Thumbplay closed a $10 million third round of funding from Bain Capital Ventures of New York, Softbank Capital of Newton Center, Mass., and i-Hatch Ventures and Redwood Partners LLC, both of New York, in October. Blue Frog has won the backing of Canaan Partners of Rowayton, Conn., and MK Capital of Northbrook, Ill.

Wienbar said Thumbplay is the most direct competitor of the three, in that both sell premium third-party content and grew primarily through customer acquisition on the Web. Jamster's connection to News Corp. results in a "more captive" content sphere, she said, while Blue Frog, an early upstart, grew via print ads.

PlayPhone is planning to launch its services in Canada, Mexico and Brazil by the second quarter of 2007, and it will push into Asia later this year.

Wienbar, a director at recently listed game developer Glu Mobile Inc. of San Mateo, Calif., said PlayPhone could be an IPO candidate, and has displayed a "very modest" cash burn rate. She also acknowledged that it could be an acquisition target for a Web portal or media organization, noting that News Corp. owns a mobile phone entertainment distributor but none of its competitors do.

Bill Graves, an associate at Montgomery & Hansen LLP of Menlo Park, Calif., advised PlayPhone as the deal was completed, while Dan Friedland in the Los Angeles office of Orrick Herrington & Sutcliffe LLP provided counsel to the investors.

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