Fairwaves’ innovation is making mobile communications affordable in rural and remote areas with a ‘network in a box’. They just raised new investments and got accepted at the prestigious Techstars accelerator in Boston, US!
Congratulations on the new milestones! What have you raised so far, and what are you still looking for?
“So far, we raised USD 240,000 from nine business angels in the previous round. We are currently raising another USD 400,000 as a bridge round. This includes taking USD100,000 from Techstars’ Star Power Fund and raising another USD 300,000 from angels on the same terms. We have several investors committed for the current round. We are looking for angels who can really add value to Fairwaves and help us grow the business. Since we are working at the intersection of developing countries, telecommunications, VOIP, and hardware, we are looking for investors with expertise in these areas.”
Why it is such a breakthrough that Fairwaves’ product has become available? And how does it actually work?
“Simply put – we provide equipment that is a network in a box. If you connect power and antennas to it, you can connect mobile phones and make calls within the coverage of this device. This is a base station and if you connect it to the Internet, you can connect with other base stations and make calls both within the network and externally.
It is unique because of the price difference and the business model. The installation cost of traditional communication equipment is USD 100,000-$200,000, but with Fairwaves, it’s less than USD 10,000. That is a radical difference, and one that allows our customers provide mobile service to rural areas where it was neither profitable nor sustainable before. We work with mobile operators with the goal of serving another billion people.
From the beginning we designed our solution with Africa in mind; we’re an “Africa first” company, which is a unique mentality within this industry. We designed our product to serve the needs of developing regions, while mobile equipment by Ericsson and similar companies, is designed to work well in cities and developed countries. They sell this equipment in developing countries, but only as an afterthought. Our primary focus on these regions and communities is what makes Fairwaves special.”
How did you and a team from Russia end up building this solution for remote areas in Africa and other regions?
“My own background is in open-source software engineering. Before starting Fairwaves, I was working at a small company that focused on open-source VOIP. When I left, I decided to continue in the same space. I was a consultant for a while, but decided a startup was the best way to pursue my passions. I began working with friends and as we moved forward, I found other people passionate about the project. Several people volunteered to contribute, as we had no money at that point, and slowly, we grew our core team.
While the first few team members were from Russia, we always had the intention of building a global company. Our team is presently distributed and working out of different countries. We knew we could change something in the world; we wanted to solve this problem we saw in Africa and recognized in developing regions around the world. We had the opportunity to build a small local business, but we turned it down in favor of building a global company in the long-term.”
What are some of the milestones you had already reached before pitching at DEMO Africa last year, and what has followed since?
“Before pitching at DEMO Africa, we already had our first pilot installation in Mexico. This was really important because by the time we pitched, we had our solution working in a production environment. Having been successfully deployed for a month validated our model.
Participating in DEMO Africa was our first dive into African culture – and we loved it! We met a lot of great people, several of whom we still connect with, both as friends and otherwise. Many individuals gave advice and support, which was helpful in building our network. In addition, we received press through African media outlets, which increased our visibility and generated excitement about our solution.
When we finally get to deploy our system and start projects in the region, we will hit the ground running due to our strong relationships and connections. In addition, we have been sharing the video recorded at DEMO Africa, which is a powerful medium to express our mission.”
How did Fairwaves develop from start to date?
“The story behind Fairwaves, which we typically don’t pitch to investors, is that we started as a completely different startup with a different idea. We tried to build a platform for software defined radio (SDR), which means a platform for everything and for nothing at the same time. We thought it was a great idea, but it had zero market traction. Developing this idea, we became increasingly interested in open-source GSM projects. As we started working more in that space, we had a customer who asked us – ‘Well, you have been developing this nice SDR thing, why don’t you actually use it to build a real, low cost mobile solution for me?’ We told him that we weren’t interested, but he was insistent so we agreed to try. That was the beginning of Fairwaves as it is now. It was a radical pivot for us, and it happened over a couple of weeks. We were hesitant originally because there were already several companies heading in that direction, but he convinced us we could do it better. So, we took this vote of confidence and started building something better. I think it’s really important that our company started with a customer’s request because we have never seen a lack of customers since then. It’s critical for a startup to have real customers from the start, as they help guide your product and business model. Because of this customer, instead of building castles in the sky, we were designing a real product for real users.”
How was it to travel around the world to find investors? What has surprised you and what had impact?
“Most of our investors are actually from Boston. One takeaway when comparing countries is that in the United States, investors love to co-invest with friends. They like to bring in people they trust, so as soon as you have a good lead angel, they will invite their friends and form a solid core group dedicated to your mission. It’s much easier to assemble and raise around that instead of going one by one. The ratio between the result and your effort is much higher this way. It’s critical to find those first investors who are well connected and active within the community.
When I spoke to investors in Africa, the biggest thing I found was that a typical angel investment in Africa was smaller than in the United States. This means you need to meet with more people to find the right fit who can make a substantial contribution. It is critical, in every country, to maintain a close relationship with your investors. It is a mutually beneficial relationship and capitalizing on their expertise while providing value allows you to get the most out of the relationship.
I rarely use the same pitch – I adjust for each person I talk to. I try to understand whether they have a background or interest in hardware or telecom or developing countries. Are they just looking to make money or is it more about the mission of our company or our team? I look at their values and then pitch them accordingly. Many investors in the States seem to be motivated purely by the idea of giving back. They have successfully grown their own companies and want to help other entrepreneurs do the same through sharing their experiences and resources. In Russia, there are more people who have money and who are playing the game. This means they’re more concerned about the return. Entrepreneurship and investment have different meanings and motivations around the world.”
Which milestones do you want to reach with your current investments, and what do you hope to achieve with your company in the long run?
“We want to achieve two things. On the business side, we want to prove to mobile operators that our technology and business model works. For that purpose, we aim to have at least one pilot with a mobile operator. From the engineering perspective, we want to streamline our manufacturing process. We have been manufacturing more or less in a garage until recently, and going forward, we want to ensure industrial quality of our equipment.”
Why is it so important to spread mobile communication to these underserved areas?
“I see there is tremendous desire to have mobile connectivity. While I only just started learning the underlying motivations for it, this desire to be connected is prevalent around the world. People have mobile phones, but in many cases, they can’t use them because they don’t have coverage. This means they have to travel into the city to make a call. Or, they have a phone and have coverage, but they can’t afford to make a call because it’s too expensive.
People are eager to get connected. What I saw and heard around the world regarding mobile connectivity is that it helps improve productivity and quality of life. Someone can avoid spending hours travelling by speaking on the phone. For a business owner, this means less time spent finding someone and more time spent on the business. Also, it just increases access to information – you can learn about pricing, weather, politics, diseases, etcetera.
It’s efficiency and it’s information. It’s a convenient way for people to communicate with their friends and families. Most people in rural regions have relatives in the city and they just want to communicate. Communication is a basic need of humans – we are an extremely social species. People around the world might not have sufficient access and resources for this. This is why Fairwaves exists – to bridge this communication gap.”
For more information see Fairwaves’ VC4Africa venture profile. Only registered investors get access to all details and can express their interest to invest. Also see the top 40 startups launching at DEMO Africa this month.
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