Pivot Financial invested in Moby—a Calgary-based internet service provider (ISP)—to help fuel its ambitious plans in the telecommunications space.
Moby is a triple-play telecommunications company that provides internet, TV, and VoIP phone services to high-density multi-family residences and mid to high-density commercial locations in Calgary. Unlike other independent ISPs that resell the services of incumbent players like Telus, Rogers, and Shaw, Moby builds and manages its own fiber end-to-end to deliver a truly unique independent offering.
We caught up with Boaz Shilmover, CEO of Moby, to learn more about the company’s growth plans and the role non-dilutive, debt-based financing plays in achieving its goals.
Where Moby originated
Growing an independent ISP
Due to the high cost of infrastructure, strict CRTC regulation, and the ubiquity of larger players, there is a high barrier to entry into the telecommunications industry. Typically, new players operate as resellers of incumbent services that differentiate themselves by price and marketing.
The first few years of Moby’s existence were spent on research and development and on proving that Nick’s concept could be commercialized. When Moby’s technology was deployed to one building in downtown Calgary, customers began signing up and, before long, Moby was the number one carrier within the building.
Moby proved its product-market fit and demonstrated that—regardless of demographics—there is a legitimate demand for alternative telecommunications providers in Alberta.
Patient capital partners
Following Triton’s advice, Boaz raised a little less seed funding than he originally intended to avoid unnecessary over-dilution of the business. He then ran a competitive capital raise process to seek out non-dilutive financing. He supplemented the remaining capital requirements with senior debt from Pivot Financial.
Like any new telecommunications business, Moby is a capital-intensive operation. There is a lot of equipment required to bring fiber to buildings to run an end-to-end ISP service. Moby selected Pivot as a growth financing company because it took the time to understand the business and saw the value in the fiber that was already running into buildings around Calgary.
“Because of our strategy, we needed a capital partner that could be patient with our growth. Pivot took the time to understand our business and thought outside the box in terms of its approach with us,” explained Boaz.
Pivot provided debt to help Moby grow its business without any personal guarantees from its broad shareholder group, which was helpful in getting a deal done. The senior debt allowed Moby to further prove its model, grow its valuation, and be in a much better position to negotiate an equity raise down the line.
The funding from Pivot has allowed us to continue to execute on our business plan and strategy, expand our footprint and our customer base, and build value before we engage with potential equity investors,” said Boaz.
Outsourcing for capital efficiency
Despite securing seed and debt funding, Moby remains prudent with its capital expenditure. It automates many of its deployment processes and uses third-party contractors, engineers, and designers to reduce fixed overhead costs.
“I see a lot of companies hiring 400 people after a series A round. We will maintain our current 12 full-time employees and outsource low-risk areas so we can scale without overburdening ourselves from a payroll perspective,” said Boaz.
Looking to execute your business plan?
Investing in marketing
Moby is utilizing some of Pivot Financial’s capital to refresh its brand.
“We have traditionally been very quiet from a marketing perspective. Unlike other national ISPs, we can’t just market anywhere. However, we're at a point where we actually have a large enough footprint in the downtown core to do a more aggressive marketing push,” said Boaz.
The team engaged Tag Advertising to build a campaign that highlights Moby’s competitive strengths—reliability, transparency, speed of service, and fair pricing.
“Our main differentiator is that we show up. We joke that our service technician will be onsite fixing the problem before an incumbent’s customer will be finished waiting on hold. And when you call us to sign up, you will be live tomorrow—no two-week waiting period,” said Boaz.
Growing sales sustainably
Today, Moby has relationships with national and North American REITs and asset managers in both the commercial and residential space. One recent deal will see Moby deliver fiber to 7,500 units in Calgary.
“Every week, new opportunities come across our table that we didn't realize existed. We are constantly being approached by condo boards and REITs to bring fiber to their buildings. Three years ago, we struggled to convince them that we were a viable option,” said Boaz.
Moby is currently licensed to supply services anywhere in Alberta. It is planning to expand from Calgary to Edmonton but every city is unique in terms of deployment.
There's immense value in each customer that we have but, as you can imagine, putting fiber underground adds an element of complexity to our operations. We take a very thoughtful and deliberate approach to our expansion strategy,” said Boaz.
Moby is continuing to expand in a sustainable way and with the help of Triton Advisory Services is actively in the process of raising Series A equity financing. Moby is looking for the right equity partner that will contribute capital and contribute to the company’s growth strategy and take it to the next stage.
The team at Pivot Financial is proud to be part of Moby’s journey and looks forward to following its success as it continues to grow.