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The project is very interesting and I hope it succeeds, yet from a financial perspective I do not understand why to fund it through retail investors/franchise m

The project is very interesting and I hope it succeeds, yet from a financial perspective I do not understand why to fund it through retail investors/franchise model/crowd debt funding. From an investor's perspective there is limited upside with full default risk, yet the risk is hardly addressed. If the risk really was low, then why not self-fund the first X PoPs and convince with data on customers, ROI etc.? See also https://news.ycombinator.com/item?id=24799084 https://news.ycombinator.com/item?id=24799084

deleted 6y ago
[deleted]
nelsondev 6y ago
Same question, why not “laser focus” your efforts on convincing one technically proficient investor with deep pockets, rather than having to convince 100s-1000s via crowd-funding? Is it that investors need to provide the roof top too, so it’s a way to reach out to property owners?
- mildlyclassic 6y ago
  Great question. There's a few reasons. First, It's taken ~20yrs, the Indian government, 15 telecom companies and more than $200B to bring ~600M out of 1B Indians 4G. Broadband deployment is more expensive and currently only 20M Indians have 10mbps or greater 'broadband' connections. Even at Wifi Dabba's dramatically lower deployment cost, the price tag to connect 500M Indians is enormous and we're not willing to wait 20 years. Even if we're insanely successful and we raise a ridiculous amount of capital, the sheer magnitude of capital required is crazy high. Second, The reason net neutrality, censorship and other malaise that ails the internet happens is because of the high deployment cost of broadband networks, this automatically makes ownership of these networks only accessible to nation states and mega large corps. Power becomes centralized. This approach we are taking at Wifi Dabba is one small step in exploring more scalable ownership, deployment and maintainence models. The basic logic is this, as the price of broadband distribution tech goes down, the more number of people that can afford to buy and distribute it and therefore everyone gets connected faster. We'd like to accelerate that process. We have raised venture capital from YC and others and will continue to do so, but we also have a really strong focus on the long view.
  - Pyramus 6y ago
    Thank you for the reply. I do understand your capital requirements in X years down the line. I also respect your goal of decentralisation and community ownership. (As an aside, what does ownership mean? If illegal things were to happen on my PoP are you saying I am liable?) Yet, my question stands: Why do you want USD 2M in cash from retail investors today? Why not self-fund the first X PoPs, show it works, then scale?
    - tobyjsullivan 6y ago
      > This approach we are taking at Wifi Dabba is one small step in exploring more scalable ownership, deployment and maintainence models. It sounds like this $2M raise is an experiment more than the end goal.
  - dahdum 6y ago
    > Even at Wifi Dabba's dramatically lower deployment cost, the price tag to connect 500M Indians is enormous and we're not willing to wait 20 years. I think I understand, and it's similar to how railways in the US were built. Savvy investors won't cover the tsunami of small region losses you'll need to scale quickly. They'll only want to fund dense, urban markets with the lowest risk.
  - sramam 6y ago
    > Second, The reason net neutrality, censorship and other malaise that ails the internet happens is because of the high deployment cost of broadband networks, this automatically makes ownership of these networks only accessible to nation states and mega large corps. Power becomes centralized. But isn't the centralization happening here too? Since the investment capital has term-limited returns, eventually the equity and equipment belong to wifi-dabba. Why should one expect a different outcome?
- daxfohl 6y ago
  Per Wikipedia, "Franchising is one of the few means available to access venture capital without the need to give up control of the operation of the chain and build a distribution system for servicing it."
- treis 6y ago
  >Same question, why not “laser focus” your efforts on convincing one technically proficient investor with deep pockets, rather than having to convince 100s-1000s via crowd-funding? Traditionally the franchise model allows for small entrepreneurs to tackle local problems while benefiting from economies of scale. In this case, small entrepreneurs can tackle connecting at the neighborhood level while wifi dabba can negotiate bulk equipment rates and tackle things like support. It's hard to scale out something like laying wire in a neighborhood because ultimately you have to hire people that don't really care about the business. They're less effecient and effective than a franchise owner who has a profit motive.
  - halter73 6y ago
    In this "franchise" model, the franchisees are passive investors not small entrepreneurs connecting at the neighborhood level. From the article: > Fully managed service Be an absentee landlord ... > Senior engineers from Google, Apple and a host of other technology companies purchased the PoPs.
arcticbull 6y ago
This is exactly why the JOBS-act style crowdfunding model doesn't work, and may harm small-time investors. If your business is low-risk, you self-fund or bootstrap. If your business is high-risk but has a decent team you can just raise from a VC. It's only high-risk, low-reward ventures that can't raise from a VC that will seek funding from a boatload of zero-value-add small-time investors.
- blueblisters 6y ago
  I think this probably falls into a very niche category of high-risk but "I get to brag about owning a piece of piece of broadband infrastructure 8000 kms away" assets. As it stands right now, investors are essentially purchasing novelty, not a risk-assessed financial instrument. It would be cool if they can make this into a legitimate funding model though.
  - arcticbull 6y ago
    IMO (and that's a big IMO), you raise from VCs not just for the working capital but also for the network and the advice. Rando JOBS act investors provide none of that, which means their money is worth a lot less. It creates a really big adverse selection risk for main street investors.

deleted 6y ago

[deleted]

nelsondev 6y ago

Same question, why not “laser focus” your efforts on convincing one technically proficient investor with deep pockets, rather than having to convince 100s-1000s via crowd-funding? Is it that investors need to provide the roof top too, so it’s a way to reach out to property owners?

mildlyclassic 6y ago
Great question. There's a few reasons. First, It's taken ~20yrs, the Indian government, 15 telecom companies and more than $200B to bring ~600M out of 1B Indians 4G. Broadband deployment is more expensive and currently only 20M Indians have 10mbps or greater 'broadband' connections. Even at Wifi Dabba's dramatically lower deployment cost, the price tag to connect 500M Indians is enormous and we're not willing to wait 20 years. Even if we're insanely successful and we raise a ridiculous amount of capital, the sheer magnitude of capital required is crazy high. Second, The reason net neutrality, censorship and other malaise that ails the internet happens is because of the high deployment cost of broadband networks, this automatically makes ownership of these networks only accessible to nation states and mega large corps. Power becomes centralized. This approach we are taking at Wifi Dabba is one small step in exploring more scalable ownership, deployment and maintainence models. The basic logic is this, as the price of broadband distribution tech goes down, the more number of people that can afford to buy and distribute it and therefore everyone gets connected faster. We'd like to accelerate that process. We have raised venture capital from YC and others and will continue to do so, but we also have a really strong focus on the long view.
- Pyramus 6y ago
  Thank you for the reply. I do understand your capital requirements in X years down the line. I also respect your goal of decentralisation and community ownership. (As an aside, what does ownership mean? If illegal things were to happen on my PoP are you saying I am liable?) Yet, my question stands: Why do you want USD 2M in cash from retail investors today? Why not self-fund the first X PoPs, show it works, then scale?
  - tobyjsullivan 6y ago
    > This approach we are taking at Wifi Dabba is one small step in exploring more scalable ownership, deployment and maintainence models. It sounds like this $2M raise is an experiment more than the end goal.
- dahdum 6y ago
  > Even at Wifi Dabba's dramatically lower deployment cost, the price tag to connect 500M Indians is enormous and we're not willing to wait 20 years. I think I understand, and it's similar to how railways in the US were built. Savvy investors won't cover the tsunami of small region losses you'll need to scale quickly. They'll only want to fund dense, urban markets with the lowest risk.
- sramam 6y ago
  > Second, The reason net neutrality, censorship and other malaise that ails the internet happens is because of the high deployment cost of broadband networks, this automatically makes ownership of these networks only accessible to nation states and mega large corps. Power becomes centralized. But isn't the centralization happening here too? Since the investment capital has term-limited returns, eventually the equity and equipment belong to wifi-dabba. Why should one expect a different outcome?
daxfohl 6y ago
Per Wikipedia, "Franchising is one of the few means available to access venture capital without the need to give up control of the operation of the chain and build a distribution system for servicing it."
treis 6y ago
>Same question, why not “laser focus” your efforts on convincing one technically proficient investor with deep pockets, rather than having to convince 100s-1000s via crowd-funding? Traditionally the franchise model allows for small entrepreneurs to tackle local problems while benefiting from economies of scale. In this case, small entrepreneurs can tackle connecting at the neighborhood level while wifi dabba can negotiate bulk equipment rates and tackle things like support. It's hard to scale out something like laying wire in a neighborhood because ultimately you have to hire people that don't really care about the business. They're less effecient and effective than a franchise owner who has a profit motive.
- halter73 6y ago
  In this "franchise" model, the franchisees are passive investors not small entrepreneurs connecting at the neighborhood level. From the article: > Fully managed service Be an absentee landlord ... > Senior engineers from Google, Apple and a host of other technology companies purchased the PoPs.

arcticbull 6y ago

This is exactly why the JOBS-act style crowdfunding model doesn't work, and may harm small-time investors. If your business is low-risk, you self-fund or bootstrap. If your business is high-risk but has a decent team you can just raise from a VC. It's only high-risk, low-reward ventures that can't raise from a VC that will seek funding from a boatload of zero-value-add small-time investors.

blueblisters 6y ago
I think this probably falls into a very niche category of high-risk but "I get to brag about owning a piece of piece of broadband infrastructure 8000 kms away" assets. As it stands right now, investors are essentially purchasing novelty, not a risk-assessed financial instrument. It would be cool if they can make this into a legitimate funding model though.
- arcticbull 6y ago
  IMO (and that's a big IMO), you raise from VCs not just for the working capital but also for the network and the advice. Rando JOBS act investors provide none of that, which means their money is worth a lot less. It creates a really big adverse selection risk for main street investors.