Wireless Needs its Stripe Moment: Why We Are Tripling Down on Gigs

Imagine a future where you subscribe to your phone plan directly through your banking app, browse the internet abroad seamlessly without surprise roaming charges, and activate your company eSIM with just a QR code. What once seemed like science fiction is about to become a reality, driven by exceptional founders who have set out to revolutionise the telco industry.

When we first met Gigs founders in early 2021, they envisioned a world where connectivity would be embedded, not bundled, and powered by an agnostic infrastructure — similar to what Stripe has done for payments. Their relentless focus and execution have transformed that vision into reality, making Gigs the clear leader in this space.

We’ve had the privilege of supporting Hermann and Dennis since their earliest days, even before Y Combinator, and have been privy to witnessing their unwavering dedication since. Today, we’re thrilled to triple down on Gigs with their newly announced $73 million Series B led by Ribbit Capital. This milestone is not only a celebration of Gigs’ incredible journey but also a testament to our belief in backing exceptional founders at every stage of their growth.

Building the Infrastructure for Wireless Connectivity

Like payments, wireless is a commodity that needs infrastructure

Call them GBs, call minutes, or SMS—they are essentially undifferentiated products whether sold standalone or bundled with another product (usually with broadband or a smartphone). Yet, launching a mobile service is a gigantic work. First, accessing the wholesale market requires years of negotiation and millions in upfront commitments. Then, you have to build network integrations with each provider. Finally, you have to develop the whole software stack and manage regulatory and operational hurdles along the way. 

Gigs is abstracting this complexity through an infrastructure that covers all of these building blocks from provisioning eSIMs to receiving the cash in the bank. Whatever your core business is, providing phone and data plans to your customers or employees becomes as swift and cost-efficient as offering payment solutions with Stripe or trading with Upvest, another Speedinvest company. 

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eSIM is fostering unprecedented innovation 

But why hasn’t this been built before? For a long time, physical SIM cards have made any innovation impossible. The recent uptick in eSIM adoption has changed the rules of the game. It no longer matters whether you have branches or know how to manage the particular logistics of SIM cards. You can go fully digital and create 10x better customer experiences. According to a study by Roland Berger, eSIM device connections are expected to grow by 40% CAGR until 2030. All new iPhones since the iPhone 14 are eSIM only and we should see the same trend across new devices. 

AI is redefining the rules in the industry

A significant amount of operators’ costs are dedicated to billing, managing subscriptions and customer service operations. Using AI can help achieve huge benefits, but it requires the data infrastructure many traditional operators lack. One example of a typical use case is customer behaviour analytics. AI can help you identify customers who are at risk of churning due to low usage or service issues. 

In this new reality, who’s going to win?

With Gigs APIs, telecom knowledge or capital are not as relevant as before. So what makes a successful MVNO? We see three more important differentiating factors. 

First, distribution is king. Any company with a sticky customer base can see immediate revenue uplift with minimal CAC and cost to serve. This is a huge competitive advantage against the traditional MVNOs who operate at thin 10-15% profit margin. Second, you need to be agile. With its API first approach, Gigs provides all the developer tooling to create a custom CX that is natively embedded in your core product. Third, your business case should make sense. But more on that below.

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From Bundled to Embedded Connectivity: Paving the Way for Innovation.

Since we first backed Gigs in its early days, the company has successfully expanded into multiple new use cases, all powered by the same agnostic platform.

The natural telco / fintech convergence 

The recent launch of Nubank’s NuCel illustrates the massive potential for neobanks. At a time when most still struggle to reach profitability, connectivity clearly stands out. Aggregating a myriad of adjacent services, from insurance to cryptocurrency, neobanks are seeing phone plans as the next gold mine. Revenue is much stickier and cheaper to acquire. Immigrant focused neobanks like Zolve or Majority can also use connectivity as a strong acquisition wedge. Indeed, the first thing you do when arriving in a new country is subscribing to a local phone plan. 

The rise of travel eSIM

Many can recall the nightmare story of this poor American who paid a $150K bill to his mobile operator after returning from Europe. That goes without saying: MVNOs are amassing billions of dollars of revenue through international roaming. Popularised by consumer apps like Airalo or Holafly, Travel eSIM is thankfully challenging this status quo. Travel eSIM, by coming early in a traveller's journey, offers a huge opportunity for OTAs, hotels, and airlines to embed connectivity directly into their offerings.

Transforming hardware into a recurring business model

Devices are another area with a huge untapped potential. Gigs' first customers were in fact consumer wearable OEMs. According to Technavio, the consumer IoT market is forecast to increase by $130B at an annual rate of around 15% between 2023 and 2028. Smartphone manufacturing or financing is another use case where Gigs’s product makes a ton of sense. We estimate that around 70% of US phones are still sold bundled with a phone plan - sometimes at 0% margin - by the telco carriers. Coming from the opposite side, Gigs can help transform hardware companies such as Light Phone into recurring business models. 

This is Just the Beginning

The next multi-billion dollar opportunity lies in people tech

In all the use cases mentioned above the end user is a customer. HR managers face huge pain points when it comes to SIM activation and management, especially for large distributed workforces. We see Gigs become incredibly relevant for employees as well. Similar to fintechs, HR platforms (e.g. Deel, Rippling, or Factorial) have built ecosystems around them. Provisioning employee eSIMs might be the next big thing in People Tech, joining payroll and spend management as crucial ancillary services.

Backing an A+ team for the long game

Together, with Ribbit Capital and existing backers, we are thrilled to continue supporting Hermann, Dennis, and the stellar Gigs team as they build the next generational infrastructure software company. Stay tuned! The best is yet to come. 

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