Sigfox pushes back IPO target to 2018, seeks further funding

Sigfox pushes back IPO target to 2018, seeks further funding

French Internet of Things (IoT) developer Sigfox has bold ambitions and the support of some huge names, but profitability is still a target in the distance.

€150 million (c. $161m) of investment is a coup for any IoT provider, especially when it’s from the likes of Salesforce, Intel, Telefonica and the French government. That’s roughly the figure that Sigfox raised last month to fund its expansion in Asia and the US. However, that number was around €50 million ($54m) short of its fundraising target, which has pushed back any plans for an IPO by at least a year.

In total, the company has now received around €300 million ($322m) to fund its low-power IoT network solutions to mainly industrial clients.

Speaking to the Financial Times after the latest round of investments, Sigfox chief executive Ludovic Le Moan was positive about what lies ahead for the company, despite falling short by 25 percent of its initial fundraising goal.

“We made €12m ($13m) last year, over €30m ($32m) this year and our goal is to cross €100m ($107m) in 2018 and go public. The goal of this round is to be the last fundraising before doing an IPO and providing liquidity for our shareholders.”

Read more: French IoT developer raises €150 million to accelerate IoT network growth

Sigfox needs huge volume to reach profitability

With the latest injection of cash, Sigfox is aiming to expand from 26 to 60 countries in the next 18 months. The majority of the money will go towards setting up 30,000 ‘base stations’ around the United States.

“The average customer fee for Sigfox is about $1 per year per device – it’s a very low-margin business,” said Le Moan. “To be profitable with such a cheap subscription fee, we need to benefit from high volumes of devices.”

Le Moan has hinted that its operations will need to scale by up to ten times before the company can consider an IPO. Currently, Sigfox’s network supports about 10 million devices, but with each new base station raising that capacity by 1 million, the company’s list of ‘Things’ could rise exponentially in the coming months.

“We need at least 100 million devices to have a good story to tell for the IPO,” he said to the Financial Times.

Read more: Scotland broadens IoT landscape with four LoRa projects

Sigfox faces an uncertain future despite bold ambitions

Sigfox’s huge estimations of the market for its connectivity are by no means guaranteed to come to fruition. There are competing low-power IoT solutions emerging in the market, including NB-IoT and LoRa.

Both Sigfox and LoRa have come to the fore in the continued absence of a cheap cellular alternative. But the emerging NB-IoT, set for expansion in 2017, could fill that gap.

Read more: M1 and Nokia complete Singapore’s first “live” NB-IoT demo