Monday, September 16

Blockchain Startup Makes Wireless Internet Cheaper, Lands Lime Scooters And Nestle As Clients

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Blockchain technology, the distributed ledger software that underpins cryptocurrencies like bitcoin, seems to be infiltrating every industry. The latest iteration: telecommunications.

Helium, a startup that uses a blockchain to facilitate wireless connections, launched national sales of its Hotspot, coinciding with the announcement of a $15 million Series C fundraising round. The Hotspot is Helium’s biggest product launch since it was founded in 2013 by CEO Amir Haleem, Napster’s Shawn Fanning and software engineer Sean Carey. Helium ultimately hopes to reimagine networking for low-powered devices while attracting customers with the promise of cryptocurrency rewards.

Helium’s Hotspot is different from a typical mobile hotspot that provides high-speed Internet access for a laptop or cell phone. Haleem boasts that Helium’s “LongFi” technology can extend 200 times farther than a standard WiFi connection, with only 50 to 100 hotspots needed to cover an entire city. Connecting to these networks could help dog owners track down lost pets using smart collars, and fast-growing scooter startup Lime plans to use Helium to track the location of its scooters.

“We don’t think you should have to pay tens of dollars a month in order to connect something like a pet collar to the Internet,” Haleem says. “Low-powered things just don’t have a way to connect to the Internet that makes any economic sense, so we have a lot of different customers we’re working with that have this problem in extreme urgency.”

Anybody in the U.S. can buy a Hotspot for $495 and connect it to a WiFi network, which then creates its own long-range network for others to use. Hotspot owners would then be paid by corporations like Lime or InvisiLeash to use their network, and they’ll receive rewards in the form of a new cryptocurrency, Helium.

The digital asset Helium is launching alongside the Hotspot with no coins previously in circulation. Haleem says the only source of new coins is through mining, and 50,000 coins will be created every month in perpetuity. Helium’s management has had conversations with the SEC about the launch, and Haleem feels confident the Helium coin will comply with federal regulations. Hotspot owners can use a mobile app to track the rewards they receive through mining and devices connecting to their network.

“We’re building what we call the People’s Network, and that is really the notion of empowering everyday people to become network operators,” Haleem says. “We designed the economics to be very specific around utility. The whole economic model is driven by applications that use the network, so the more InvisiLeash collars and Nestle delivery trucks and Lime scooters that use the network, the more valuable we think the economics are. It is much more about making the thing work than being a purely speculative vehicle.”

Since its founding in 2013, Helium has generated some revenue by working directly with customers on specialized applications, but most of its capital has come from three rounds of fundraising totaling $51 million, with its Series C fundraising co-led by Multicoin Capital and Fred Wilson’s Union Square Ventures.

“This solves a real unmet need,” Multicoin Capital Managing Partner Tushar Jain says. “There are a number of reasons why this was possible now and it was not easily possible six years ago. There’s a lot of difficult, sophisticated technology that goes into this that just takes time to develop.”

Those investors are hoping their patience pays off after the Hotspot’s launch. Partners like Lime, InvisiLeash, Agulus and Nestle are already on board as customers. Since not all data usage requires as much bandwidth as streaming YouTube videos or a Netflix movie, using the Hotspot could save these companies money by offering an alternative to costly cellular plans that provide more services than they need.

Haleem cites Nestle’s ReadyRefresh delivery service, which refills office water coolers, as another example of a seemingly mundane business that could benefit from the Hotspot. Sometimes, the water runs out sooner than expected and Nestle has to make an expensive unplanned trip, or it might make unnecessary delivery trips when a cooler remains mostly full.

“All they’re looking to do is understand how much water is being consumed from a given water cooler. Today, there’s not a cost-effective way for them to do that. They can certainly use cellular to do it, but it’s very, very expensive for just sending a percentage reading once a week,” Haleem says. “It ultimately will save them tens of millions of dollars a year.”

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