Any future move to provide another internet cable out of New Zealand will probably need a "significant proportion" of local funding to succeed, says Pacific Fibre co-founder Rod Drury.
Pacific Fibre planned to lay a 12,950km fibre cable between Auckland, Sydney and Los Angeles.
The project would have cost an estimated $400 million.
But on Wednesday, the company announced it had failed to raise enough capital to go ahead.
Drury said yesterday that during negotiations the company discovered a "whole lot of political stuff", including tensions between the United States and China over investment.
Security issues over Chinese involvement in telecommunications infrastructure made headlines this year when it was revealed the Australian Government had banned Huawei from tendering for its national broadband network.
Asked if the United States had security concerns over potential Chinese involvement in Pacific Fibre, Drury replied:
"What I will say is you start connecting cables and those are the sort of national concerns that all governments would have.
"But that's why it was important we had a significant portion of New Zealand funding into the project. If you can't get New Zealand funding you have to look offshore and then you start getting more into these sort of issues.
"It would have been much easier if we had the cable largely New Zealand funded ... but we didn't."
Drury said it was unlikely another private company would get a cable project like Pacific Fibre's off the ground.
While he was not advocating Government funding for the cable project, he had hoped other funding vehicles in New Zealand would have got on board.
"A frustrating thing about being in a small country is you can't get everyone together and make it work," he said.
One possible investor could have been the $19 billion New Zealand Superannuation Fund.
But a fund representative this week said it undertook extensive due diligence on Pacific Fibre, but was unable to "gain enough confidence" in the opportunity.
Although Chinese-backed company Axin flagged its intentions last year to build a 3000km cable between Australia and New Zealand, it has not since revealed any significant progress.
Pacific Fibre chairman Sam Morgan said on Wednesday there was "plenty of talk but very little walk" from other players who spoke about a cable project but his team were the only ones who "put their money where their mouth is".By Hamish Fletcher @hamishfletcher Email Hamish