A company planning to provide New Zealand with a new connection to faster internet has secured important links with American investors.
Pacific Fibre, due to build a second fibre-optic cable from New Zealand and Australia to the US, announced the conclusion of its fourth round of funding yesterday, raising over $5.5 million including contributions from Valar Ventures.
Valar Ventures is the local investment arm of Peter Thiel, co-founder and former chief executive of e-commerce business PayPal.
As well as the financial contribution, Valar Ventures puts Pacific Fibre on a better footing with US investors as the company moves into its crucial financing stage to secure the US$300-400 million ($395-526 million) needed for the project.
"[Valar Ventures'] West Coast networks and Wall St experience will be a great help to us as we enter the major financing phase," said Pacific Fibre's chief executive Mark Rushworth.
The former Vodafone chief marketing officer is a founder of the company which also has backing from Trade Me founder Sam Morgan, The Warehouse's Sir Stephen Tindall and Xero founder Rod Drury.
"It's the link, the networks to the US [that are important]. That's why we've looked across our entire shareholder base making sure we've got heavyweight investors with strong contacts in Australia, New Zealand and now the US," Rushworth added.
With Pacific Fibre planning to have its funding secure by September, Rushworth said there was still a lot of work to do, but he was confident enough would be gathered for the "railroads of today".
"If you look across New Zealand technology and infrastructure we're one of the key games in town. We've got governments in Australia and New Zealand investing billions of dollars in fibre-to-the-home, which is going to generate another huge kicker in demand for international bandwidth.
"It doesn't take a rocket scientist to work out there's a strong business case here and it's a key piece of infrastructure that both countries need in order to maximise fibre."
The cable is the second fibre line out of New Zealand and is needed as the demand for internet bandwidth (the rate at which data can be received and sent) exceeds what the current Southern Cross cable can provide.
Pacific Fibre claims its cable will have five times the capacity of Southern Cross' and will lower prices by introducing competition.
Rushworth said the company would soon put the call out to Australasian, Asian and US investors and was in the process of discussing additional finance with banks. The bank loans would then be offset by contracts with internet providers planning to tap into the line once it is completed.
This year Pacific Fibre plans to select the vendor who will supply the materials needed to build the cable.
"We're issuing a request for proposals and will have the vendor selected and signed by end of the second quarter, with financing for the full bill to match," he said.
If both funding and a supplier is agreed upon, Rushworth said the project would be on track to meet its planned completion date.