Investment fund and results-as-a-service business helps cities build smart infrastructure despite tight budgets


Digital Alpha uses results-based funding to support the construction of 5G networks and smart city projects, including one in Erie, PA.

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A Cisco investment fund and results-as-a-service company are working with cities to fund 5G networks and smart city projects. This new approach uses Digital Alpha’s upfront investments and long-term revenue sharing to fund public Wi-Fi and smart lighting projects, even when cities don’t have the funds to pay for this infrastructure to the public. advanced.

The funding mechanism combines results-as-a-service and results-based funding. Consulting firm Quantela is looking for ways to combine smart city services such as modern lighting and smart waste management with advertising-powered information kiosks to create the right mix of funding. The city then pays for the investment over time.

Ed Olsen, vice president of results-based financing for Quantela, said more cities are considering a comprehensive plan for smart city technologies instead of a series of one-off projects.

“They’re creating much more inclusive plans to deliver pervasive value across multiple disciplines and feedback on data, automation, AI decision-making, and revenue to pay for the technology,” he said.

Erie, Pa., Is using this approach to expand free public Wi-Fi throughout the city, install cameras to monitor public safety, and upgrade lighting. City leaders used an initial investment of $ 500,000 from Digital Alpha to secure a matching grant that doubled the project’s budget.

Mayor Joe Schember worked for PNC Bank in Erie for 40 years before becoming mayor. He said that building a smart city infrastructure was one of his goals when he first took office.

The first phase of the project was to expand Wi-Fi access to several neighborhoods in the Opportunity Zone in Erie. Opportunity zones are a tool for economic development that allows people to invest in low income neighborhoods in the United States. The goal is to stimulate economic growth and job creation in these communities while providing tax benefits to investors.

The city tested the new connectivity as part of a downtown pilot project that offered free internet access. In addition to this free Internet access, the city plans to install cameras and modernize lighting.

“The city’s electricity costs will drop by $ 30,000 per year once the lights are installed,” he said.

Schember said the city will use the savings to pay for the Wi-Fi service. He said the city will also use connectivity to measure attendance at city events.

Schember said he hopes this will be accomplished by the end of this year.

Cisco launched the tech fund in 2017 to support infrastructure projects.

Digital Advisors just closed a second operating fund with more than $ 1 billion to invest in businesses and revenue sharing deals in three verticals: Next Generation Networks in the form of investments in l 5G infrastructure and Wi-Fi 6 solutions, cloud computing and IoT enabled. smart city solutions.

According to a press release announcing the new fund, Digital Alpha invests in the infrastructure layer above the base layer of radio masts, fiber optic cables and data centers and supports the consumer layer, which focuses on digital content, apps and devices. The Fund Advisors will build a portfolio of “anti-fragile” investments with resilient business models in leading operating companies and associated revenue sharing structures.

Results-based financing and smart city projects

For city and state governments, the fiscal shock of the pandemic will be similar to the 2008 recession, according to the Council on Foreign Relations. Washington Post analysis found that the majority of states have seen their tax revenues decline five states, including Alaska and Florida, reported double-digit declines.

The COVID stimulus bill of March 2021 including $ 350 billion for state, city and local governments. Cities can use this money to cover public health expenses, provide additional pay for essential workers, replace lost tax revenue, and invest in water and sewer or broadband infrastructure.

Olsen of Quantela said results-based financing uses a revenue-sharing model to enable cities to quickly launch smart infrastructure projects.

Most of these projects are on hold or on the back burner due to lack of resources, “he said.” It is becoming a positive way for cities and customers to advance technology today. “

Olsen said Quantela uses this approach to fund five types of projects that can save money or generate income:

  1. Digital advertising
  2. Public Wi-Fi
  3. Smart lighting
  4. Smart parking
  5. Smart waste

“We’re always looking for ways to monetize data or other things that could become assets,” he said.

The city still has the technology and the data, Olsen said.

He said city leaders and Quantela select content that goes on portals that connect users to public Wi-Fi. This can include a link to a city website, event information, links to local businesses, and regional and national advertisers.

“The city uses the data to understand how people use city services such as parks and infrastructure items,” he said.

He said public Wi-Fi was one of the most common projects with smart lighting.

“We help a city plan the project, minimize the risk of a particular solution, and then put in a revenue sharing structure to make sure the investment pays off,” he said.

As Quantela charts the revenue-sharing timeline, the company looks for ways to combine multiple smart city projects to offset the cost of an effort like replacing Old Town street lights with more efficient versions.

Quantela’s calculations include data points such as the city’s monthly electric bill for street lights, the number of information kiosks a space could support, and potential advertiser revenue. The team draws up a first plan and presents it to city leaders.

“If they want to move forward, we present the project to Digital Alpha, and if they give us a first boost, we do a more in-depth analysis to validate each cost and each return,” he said. he declares.

Olsen said the profitability of these projects varies from five to ten years, depending on the mix of services and the size of the project.

Olsen said Quantela is working with Peachtree Corners in Georgia to launch a set of self-driving buses.

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