Fon, the world’s largest WiFi network, announced today at the Mobile World Congress in Barcelona, that it has secured €10 million ($13.5 million) in new funding led by Atomico, the venture capital firm founded by Niklas Zennström, co-founder of Skype.

Coral Group and other existing Fon investors also contributed to the round designed to help Fon take advantage of the growing demand for WiFi from smartphone and tablet users, and to expand their efforts in the US and elsewhere. The funding follows previous rounds, which raised a total of more than €40m since the company was founded by serial entrepreneur Martin Varsavsky (Jazztel, Viatel) in 2006.

Fon, which features Fonera routers that let users connect to WiFi at Fon hotspots anywhere in the world for free in exchange for sharing a bit of Fon WiFi at home, recently announced its WiFi network has grown to 3.35 million hotspots. This is an increase of more than 200% year-on-year. Fon sold about 1.6 million routers in 2010 contributing to revenues of €28 million, up from €5 million in 2009.

Martin Varsavsky, Chairman and founder of Fon, said:

“I have built six technology companies, and what sets Fon apart is the caliber of its investors. We could have done an outside round but as an entrepreneur it gives me a great feeling to have the continued support of our existing investors.”

Niklas Zennström, CEO of Atomico, said:

“This is what we love at our venture capital firm: working out which companies have the ability to scale using new technology and are led by remarkable management teams, and then helping them thrive. Fon has a unique business model using a crowdsourcing approach to provide high-speed internet on the move. Today’s announcement is great news for Fon and the millions more people who are set to use it.”

Fon produces 802.11n Fonera WiFi routers that when connected ADSL/broadband make it possible to broadcast two dedicated WiFi signals. One signal is encrypted and private. The other signal is public and accessible via password to registered members of the Fon community. Fon also builds its WiFi technology directly into its telco partners’ CPEs, including BT in the UK, MTS-Comstar Russia, SFR France and ZON Cable Portugal.

Fon also has an agreement with SoftBank, the innovative Japanese mobile operator. The company uses Fon’s WiFi routers together with the iPhone to give its mobile customers faster internet access and reduce the load on its mobile network. Similar deals with mobile operators elsewhere are expected.

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