New funding will fuel some mergers and acquisitions, says Plume CEO

Just months after Plume raised $ 270 million from an “E” funding round, the smart home software and analytics specialist plunged into the stock market again, this time pulling out $ 300 million. dollars from an “F” round of funding led by SoftBank Vision Fund 2.

The new round brings Plume’s total funding to nearly $ 700 million and sets its valuation at $ 2.6 billion, according to the company.

Plume said he would use the funds to drive overall growth, especially in areas that encompass R&D, sales and marketing, new partnerships and even some acquisitions.

“We will be making a number of acquisitions to [obtain] The R&D capacity ”, as well as the talent, said Fahri Diner, CEO of Plume.

While some mergers and acquisitions targets may be sources of income for the private company Plume, this will not be the primary focus. Instead, Plume intends to look “all the way up and down the stack,” Diner said. This, he added, could lead to agreements expanding Plume’s cloud, data, algorithm and artificial intelligence capabilities, and possibly branch out into some areas adjacent to the primary focus of Plume. the company on the smart home, he said.

Not on the target list for mergers and acquisitions: equipment of consumer premises. “I’m not trying to buy a computer hardware company or computer hardware companies,” Diner said.

Diner also expects Plume’s employee base to expand in the United States and internationally soon, with growth to come both organically and through potential mergers and acquisitions. Plume now has nearly 500 employees and hopes to reach 600 by the end of the year, even without a potential acquisition. Plume is expected to approach 1,000 people by the end of 2022, “if all goes well and we perform well,” he said. “We want to grow globally.”

Growth opportunities take precedence over short-term profitability

While Plume raised another big round of funding about eight months after raising the previous big round, the obvious question is: when will the company, whose Wi-Fi management software and cloud services support around 230 ISPs? and help manage 1.2 billion devices worldwide, turn the corner and become profitable?

“I can be profitable today if I revive my growth. We are not profitable by choice,” Diner said. But he adds that Plume, which operates on a software-as-a-service model, is a high gross margin company with relatively low capital costs. “I don’t need to network to grow? or buy silicon or hire factories to develop. I am not a company focused on capital spending. ”

While private markets do more than do the work to fund Plume’s growth plans, Diner isn’t ruling out the company eventually going public. But the current priority is to add clients and expand into new areas, not to go the route of an IPO.

“Our scale is now big enough that Plume can be a very healthy and very exciting public company,” said Diner (Plume does not disclose its financial data). “The private markets have money on hand and you can provide liquidity along the way to your existing investors. But please don’t interpret this because I’m not interested in going public.”

Broadband providers must “own the lounge”

Diner believes Plume will be able to further penetrate the market and be adopted by ISPs as they seek ways to differentiate themselves beyond speeds and prices, and effectively redefine what the broadband product is. .

Broadband providers need to “own the lounge, own the experiences,” he said, noting that it might make more sense for them to focus more on packages that bundle everything together rather than trying. to sell smart home products as a premium addition. ons.

“This is where the competition is. [The ISP’s] the ability to organize and deliver new services that create rigidity and generate additional ARPU faster than their competitors is what will matter in the future, ”said Diner.

And it’s not just traditional telecoms and cable companies, he said, noting that Google, Amazon and Apple are all trying to come out on top to make the living room experience their own.

“ISPs have an unfair advantage today, but if they don’t look to where I think the consumer is going, I think this industry will be very different five years from now,” Diner said. “Some of the world’s most capable, fastest and most innovative major technologies [companies] have their eyes on the living room. ”

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– Jeff Baumgartner, Editor-in-Chief, Light Reading