US fixed wireless broadband provider Starry plans to go public via a Special Purpose Acquisition Company (SPAC) merger.
SPACs are shell companies that list on the stock market with the intention of acquiring companies that wish to go public quicker than the traditional IPO process.
Starry this week announced it was merging with FirstMark Horizon Acquisition Corp, a SPAC sponsored by an affiliate of New York venture capital firm FirstMark Capital.
Founded in 2014, Starry provides fixed wireless broadband to residential and small- and medium-sized businesses from towers and rooftops. Starry has deployed its gigabit network in six US cities including Boston, New York, Los Angeles, Washington D.C., Denver, and Columbus.
The merger will value Starry at around $1.66 billion and will give Starry $452 million in cash. The merger includes $130 million in PIPE funding – essentially a private equity funding round to raise additional funds for the SPAC – from ArrowMark Partners, Atreides Management, Fidelity Management & Research Company LLC, and Tiger Global Management. FirstMark Capital was an existing long term investor in Starry.
The additional funding will be used to fund its growth and the deployment of its services across the United States, and to retire Starry’s existing debt.
“When we set out to build this business, we wanted to transform how broadband networks were built so that we could meaningfully improve people’s lives with faster, better, more affordable internet access,” said Chet Kanojia, co-founder and CEO of Starry. “This business combination with FirstMark will give us the necessary capital to expand our business and reach profitability.
“I cannot think of partners better suited to support our growth than FirstMark and FirstMark Capital and we’re excited to continue our relationship with them.”
Starry has raised around $130 million through funding rounds; as well as FirstMark and Tiger Global, previous investors include Quantum Strategic Partners, media firm IAC, and KKR.
The company has reportedly invested $200 million developing its own antennas, base stations, receiver terminals, and routers. The company expects revenues of $22 million in 2021, and is projecting $679 million by 2025. The company made an $83 million Adjusted EBITDA loss last year, and is expecting a $105 million loss in 2021. By 2025 it is expecting Adjusted EBITDA profit in the region of $240 million.
FirstMark Horizon Acquisition Corp is lead by FirstMark Capital founders Richard Heitzmann, and Amish Jani. FirstMark Capital’s notable investments include Pinterest, Shopify, Airbnb, DraftKings, and Riot Games. FirstMark Horizon raised about $360 million during its October 2020 IPO.
“Chet and the Starry team have built a company grounded in deep R&D, capable of disrupting the status quo in an enormous broadband market that is largely untouched by competition,” said Amish Jani, Chairman and President of FirstMark. “We have known Chet and the Starry team over multiple companies and have the utmost confidence in their ability to execute and perform because we’ve seen them do it before. We could not be more thrilled to bring Starry to the public markets through this transaction that we believe is aligned for the long-term performance and long-term success of the company.”
The merger is expected to close in Q1 2022. Upon completion, the combined company will continue to operate as Starry and will be listed on a national exchange under the ticker symbol “STRY.” Kanojia will remain as CEO of Starry.
This week Quantum computing startup Rigetti announced it was going through a SPAC merger with Supernova Partners Acquisition Company II. This year has also seen IonQ and Cyxtera go through SPAC mergers, while Telecity's Michael Tobin has revealed plans to build his own SPAC, and a number of former CyrusOne execs have joined the InterPrivate IV SPAC.
Another communications infrastructure-focused SPAC, called IX Acquisition and led by IXcellerate founder Guy Willner, this week said it planned to raise $200 million floating on the Nasdaq. The company said it plans to acquire technology infrastructure and businesses – with a focus on tower companies, data centers, and fiber networks – in Europe, Asia, and/or emerging markets.