As many of you savvy readers are probably aware by now, London based FTTB company Hyperoptic has secured a £50m funding from Quantum Strategic Partners, a structure owned by Soros Fund Management. The UK general and tech press are all talking about it: The Guardian, The Register, Think Broadband, etc.
This is great news for Hyperoptic. The company was initally funded solely by its founders Boris Ivanovic and Dana Tobak, but anyone with experience in FTTx payback knew that they had to find external cash sooner rather than later. This now gives them a much longer time horizon to develop on the network side and upsell on the services side.
It’s interesting to consider why they have secured the funding when other operations in Europe and even in the UK are still struggling to get funded. I suspect it’s down to three things:
- They didn’t wait for funding to get customers; by connecting buildings and customers in London, Hyperoptic demonstrated to potential funders the economics of their model, and that makes things a lot more reassuring for any funding outfit.
- From the start they targeted upmarket areas where unhappiness with BT and ability to pay combined to create a market opportunity. They also went for FTTB, which is the cheapest option to deliver speeds way faster than what FTTC or Cable can easily offer.
- They’re pragmatists. I’ve met with them only once (and spoken to a number of their people on various occasions) and these people aren’t visionaries. They’re not looking at what they do as a world changing revolution, more as catching up with what’s been done elsewhere. They’re cautious, but they know how to take decisions.
The exciting thing for those of us who have been lamenting the absence of funding for FTTx operations is that it means financiers get it, or at least some of them do. This is Soros though, and his views and choices carry significant weight. I don’t know if Quantum Strategic Partners is now looking for other similar projects to finance, but I suspect other funds will now be looking in this field with a different outlook. While Hyperoptic isn’t the first FTTx operation to be financed in this way, it is the first start-up in this field to do so as far as I’m aware, and that means a lot.
One interesting aspect of this is that Hyperoptic is purely private. It isn’t a PPP, it doesn’t rely on subsidies or public funding in any way. It might very well be that the signal this conveys doesn’t change much for municipalities and PPPs: public involvement is not always seen as a plus in the financial world (and that’s an understatement…)