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UPDATE2 B4RN Start £3m Crowdfunding Drive After Loss of EIS Tax Relief

Wednesday, February 20th, 2019 (8:45 am) - Score 1,720
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The community built and funded rural UK ISP B4RN, which has been rolling out a 1Gbps capable Fibre-to-the-Home (FTTH) broadband network to remote parts of Cheshire, Cumbria, Essex, Lancashire, Norfolk, Suffolk and Yorkshire, looks to be preparing a crowdfunding drive in the hope of raising £3m to help it expand.

At present B4RN has deployed over 3,000km of optical fibre cable and they’ve connected well over 5,000 premises (live customers) to their network since starting their roll-out in 2012. The majority of the network to date has been funded by local residents investing over £5 million in shares in the company and many of those have done this as part of helping to physically build the infrastructure.

NOTE: The new funding drive is NOT live yet but we have been told that it will be formally announced next Tuesday (26th Feb 2019).

On top of that lots of rural land owners (often farmers) have supported the cause by agreeing to waive their right to payment under a wayleave (access) agreement. Meanwhile any money the service makes is generally reinvested back into their network and used to further improve coverage or connect local schools for free etc.

All of this was working well until recently, when the Government suddenly removed their tax breaks following changes to the Enterprise Investment Scheme (EIS). This came after HMRC deemed their model to be “fundamentally uncommercial” and thus no longer eligible for such benefits (here and here).

As B4RN’s CEO, Barry Ford, told us at the time: “If landowners are going to agree to laying ducts across their fields and waiving any wayleave charges they have to be convinced it’s a community project and no one is going to make any money. The HMRC ruling means that this structure cannot be used if EIS is needed (and 30% tax relief is a big incentive).”

The outcome threatened to slow B4RN’s deployment, but adaptability is the spice of life and they now appear to be developing a new crowdfunding drive via Triodos Bank (here). That page was apparently published by accident ahead of time and has since been removed, but it suggested they’ll aim to raise £3m within 70 days on a 7 year term (i.e. a minimum of £1m and maximum capital raise of £5m), with interest of 4.5% per year being promised.

Barry Forde, B4RN CEO, said:

“The issue of a lack of decent broadband in rural Britain is an everyday problem for its residents and businesses, and yet it needn’t be. We have overcome challenges the large providers were just simply unprepared to take on and by working as a community we have managed to bring the UK’s fastest broadband to some of the UK’s most rural areas.

By crowdfunding through Triodos we can connect more and more rural properties, which makes a huge difference to everyone living and working in those communities, and local schools benefit from free broadband. I am proud of what we have achieved so far, but through this bond offer I am very excited about our future and the impact we can have for rural UK communities.”

As ever with such initiatives the crowdfunding page warned that repayment is “not guaranteed” and the minimum investment allowed is £50. If less than £1 million is raised within the first 70 days, the monies will be returned to investors with no accrued interest.

The move, once formally announced, will certainly be an interesting one for a socially structured ISP, where profits are generally reinvested back into the communities they serve. Nevertheless it could represent a useful way for B4RN to continue expanding at their current pace.

At present the communities that B4RN target are still required to raise up to 50% of the installation cost of the network through shares before they can start working in the area, but the provider still needs money to ensure they can close the funding gap in order to start a build. By comparison, vouchers from the Government will only go so far and can’t be used everywhere.

UPDATE 10:14am

The crowdfunding campaign page appears to have vanished, we’re trying to find out why but suspect it was published before they were ready to announce the news.

UPDATE 26th Feb 2019

The campaign has today gone live with B4RN looking to raise £3 million in order to fund the continued roll-out of their full fibre network in more rural communities. The aim being to “quadruple” its network over the next five years.

Dan Hird, head of Corporate Finance at Triodos Bank, said:

“We are delighted to be working with B4RN to help them raise the capital they need to expand their vital service. B4RN is an innovative social enterprise demonstrating that a community approach can deliver a state-of-the-art broadband network in rural networks. It is sure to be of interest to investors that would like to support pioneering organisations delivering positive change.”

At the time of today’s press release the official page on the Triodos website (linked earlier in the article) still lists this campaign as “coming soon,” but we expect that to change within the next few minutes or hours. B4RN is understood to have a pipeline of nearly 10,000 properties waiting to be connected and they want to increase their current connection rate of 100-120 per month up to 500 per month.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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