We are continuing to see fallout from the COVID-19 pandemic and its impact on the tech industry, with one of the latest developments coming out from France. Sigfox -- a high-profile IoT startup that had raised over $300 million in venture funding and had ambitions to build a global communications network using a new approach to wireless networking -- has filed for bankruptcy protection in France, citing slow sales of its products and challenging conditions in the IoT industry due to COVID-19.
It said it would be using the process, which will initially last six months, to seek a buyer "to support Sigfox’s long-term development and propose to maintain jobs." It will continue operations in the meantime: Sixfox says says its network spans 75 countries, stitching together capacity from 75 carriers, and that it connects 20 million objects and sends 80 million messages per day.
The details for the bankruptcy were outlined in a statement provided to TechCrunch by the company. The statement also noted that business was being impacted by a shortage in electronic components.
"The decision to place Sigfox under the protection of the Justice through this proceeding was made because of a slower-than-expected adoption cycle for its technology, despite effective shareholder support," it reads. "In addition, the IoT sector has suffered from the Covid-19 pandemic crisis, slowing down activity over the past two years and putting the pressure on the electronic components market, now in shortage. These factors combined have strongly impacted the company's financial situation, in particular its debt level, which now makes it difficult to speed up the development of Sigfox and its worldwide recognized technology in an increasingly competitive market."
Sigfox had raised more than $300 million from a group of high-profile investors that included Salesforce, Intel, Samsung, NTT, SK Telecom, energy groups Total and Air Liquide, and many others. When we last covered the company's financing, a €150 million round in November 2016, it was valued at around €600 million ($670 million at today's rates). A profile of the company a year later described it as a "unicorn" -- that is, valued at over $1 billion.
According to Sigfox's statement, the receivership/rehabilitation proceeding was opened in the Commercial Court of Toulouse at the request of the CEO, and it pertains both to Sigfox and its French subsidiary Sigfox France. It will last for an initial observation period of six months, the notice said. (That notice does not appear to be on the company's own news pages, where the most recent update is from earlier this month and seemed to imply business as usual, announcing a partnership with two semiconductor companies to advance its networking solutions.)
"This procedure will allow the Sigfox group to continue all its commercial activities to deliver its clients and meet their needs, under the authority of mandators designated by the Court," the notice reads.
For those who had been keeping tabs on the IoT market out of Europe, and Sigfox in particular, this development should not come as too much of a surprise. As Chris points out in the French Tech Journal, auditors for the company had issued a stark warning in September that year that the company had to raise funding by the end of the year or risk insolvency.
That funding has yet to materialize.
Meanwhile, the company's finances speak for themselves. Public account filings for the company note that in the last financial year, the company posted a net loss of nearly €91 million on revenues of just over €24 million, and financial debts of €118 million.
Sigfox had been one of the bigger names in IoT to come out of Europe and its early and robust fundraising put it on the map among French startups attempting to deliver groundbreaking technology.
Sigfox emerged at a time when IoT was still very much a nascent concept, with little in the way of lucrative business models behind it, and much of IoT activity being pushed by carriers who looked at IoT as an enterprise play and way to sell capacity on their established mobile networks.
Sigfox's unique claim was not just that it was building an IoT network, but that it was going to do so on a new kind of concept for harnessing power, making its networks, and the devices connected to it, considerably more sustainable and efficient. As we noted at the time, it was part of a bigger picture put forward by the company's then-head and founder, Ludovic Le Moan, about how Sigfox's understanding of how power and communication worked related to Simulation theory.
“[The simulation] is part of the vision that I have, and I want Sigfox to be able to stay true to this,” he said at the time. “This world is virtual. At the end of the day we are not living in the real world.”
Le Moan parted ways with the company in February 2021, to be replaced by Jeremy Prince, who is the current CEO.
Despite the company's financial troubles, it seems that there is a business to be salvaged or saved here. Sigfox claims that its "low cost and low energy technologies" currently span across a global network that owned and operated by 75 operators (in other words, it seems to stitch together capacity from several other carriers for its own virtual network). That network, is says, covers a population of 1.4 billion people in 75 countries, and processes nearly 80 million messages per day generated by 20 million objects registered to its network. It says that it has commitments from 5,000 customers to deploy 50 million objects in total.
We'll update this post as we learn more.