Helping ISPs grow

By on 26 Sep 2019

Category: Development

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One of the first projects I was involved with was in India where an organization named AirJaldi has been building Internet infrastructure in pretty rugged, rural places for over a decade. (Image: AirJaldi, Twitter)

Earlier this year, I enjoyed my first trip to South Korea where I attended my first APRICOT meeting. It was a great opportunity to connect with many new people and reconnect with old friends in the Internet community, and learn about the new technologies, challenges and opportunities they all face.

I learned the importance of attending these sorts of events shortly after I began working at Cisco Systems in 1988 — it was a small company at that time, as was the Internet — specifically for the networking opportunities they provide. The people network has and remains the foundation for the Internet.

Having stepped away from Cisco some years ago now, I’ve turned my attention investing in and assisting organizations and people with developing the Internet, particularly in rural and remote areas.

One of the first projects I was involved with was in India where an organization named AirJaldi has been building Internet infrastructure in pretty rugged, rural places for over a decade. Over this time they have invested in expanding their network, its capacity and its speed, to the point that whether you’re in Himachal, Uttrakhand or Jharkhand, if you’re an AirJaldi customer, you can get the same quality of Internet as if you were in Delhi, Gurgaon, London or New York.

When you visit these remote places, such a result is profound: previously one had to move to a city to do any number of things, but now every village can be part of the Internet. Some great stories about the impact are here.

Since that first project I have been certain that good quality and affordable Internet connectivity could be brought to most rural places in India, Africa, and South East Asia. Along the way, I’ve helped various projects and groups, including the NSRC, AfNOG, and WNDW.

From these experiences, I’ve learned that it’s mostly about making access affordable, so I took this as an engineering and management challenge, in particular, how do we reduce the costs? Technology and wholesale bandwidths costs are dropping so it’s less about the kit than it is about the people and organizations.

We can’t provide the Internet as a charity project. There is really no impact without scale and no scale without sustainability. With that precept in mind, I have done a series of equity investments in small companies, especially ISPs in Africa and India, through INI Holdings.

Funding your ISP: Capital and connectivity

I came to APRICOT to give a talk on ‘Funding Your ISP: Capital for Connectivity’. As I’ve learned over the years, there are different forms of investments, including grants, equity, and loans. Each has its pros and cons (Table 1).

Grants Equity Debt
Stage Early
(Stage 1-3)
Early & Growth
(Stage 2-5)
(Stage 3-5)
  • Non-dilutive
  • Risk-tolerant
  • No interest payments
  • Long term expectation
  • Non-dilutive
  • Fixed length
  • Cyclical availability
  • Reporting requirements
  • Restrictions on use
  • Dilutes ownership
  • Liquidity expectations
  • Repayments
  • Interest

Table 1 — Types of funding and each one’s pros and cons.

Which is best depends on many factors, including the stage of the company — Table 2 illustrates this:

Stage 1:
Stage 2:
Stage 3:
Stage 4:
Stage 5:
Resource Maturity
Sweat Equity Initial Traction Equity Investment Takeoff The Big Leagues
  • Trial network up
  • > 3 people
  • > 50 Mbps
  • Traction with >100 customers
  • 1-3 POPs
  • > 100 Mbps
  • 100-300 customers
  • 5-10 POPs
  • >250 Mbps
  • 300+ customers
  • Cash flow positive
  • > 500 Mbps
  • Fully operational business units
  • > 1 Gbps
  • Grind away
  • Angel/friends & family investments
  • Possible grant funding (ISOC, ISIF, Community Networking)
  • Early stage equity
  • Growth capital through loans
  • Equity investments from institutional investors
  • Access to multinational lenders
  • Multinational equity investors

Table 2 — The five stages of ISP growth.

The best kind of funding, however, is sales — every dollar that comes in from sales is one less dollar needed from lenders or investors. It’s also a confirmation that you’re doing something that’s needed. 

Capital to expand Internet frontiers

Ben Matranga and I have launched Connectivity Capital, a debt fund to expand access to the Internet in frontier markets. We think of it as ‘Small business banking for ISPs’. Our investment ethos is based on four principles:

  • ISPs will complement MNOs. Users demand both affordability and convenience, and while some players may dominate, connectivity is not a winner-take-all market. Coexistence and thriving together is the global norm and will continue in frontier markets.
  • Lack of capital slows ISP growth and therefore access to connectivity. ISPs in frontier markets exist but often delay, forgo, or fail in their expansion plans because of the lack of appropriate capital.
  • Debt is simpler than equity — it has a non-fiduciary investee relationship and is self-liquidating.
  • A sector-specific debt fund has a better risk assessment in terms of understanding an ISP’s business metrics, risk and appropriate mitigation structures required to accelerate its growth.

As mentioned above, debt is useful for established ISPs that want to expand. It’s not intended to cover operational losses but might be used to purchase equipment for geographic expansion or finance equipment. The requirements to be eligible for a loan from Connectivity Capital include:

  • Over two years of operations
  • A strong management team
  • Minimum annual revenue of USD 250,000

Documentation, including audited financials or management accounts, and identified use of funds (capital expenditure plan).The loan terms are:

  • USD 200K to USD 2M loans
  • Term up to 36 months
  • Flexible ISP-specific collateral arrangements

I presented this at APRICOT in South Korea and many people were interested. For more information see and the slides from my presentation below.

Jim Forster is general partner of Connectivity Capital and managing director of INIHoldings.

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The views expressed by the authors of this blog are their own and do not necessarily reflect the views of APNIC. Please note a Code of Conduct applies to this blog.


  1. Manoj

    Hi Jim,
    We are Kolkata (India) Based ISP and providing Internet PAN India.Gone through your article and we are interested to expand our presence up to Rural area if we get proper support.
    Pls guide.

  2. Jim Forster

    Manoj — thanks for responding. I suggest you fill out the from at and we’ll be in further contact. — JIm


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