French IoT player Sigfox has asked shareholders to approve a funding injection of about €40 million (US$49.3 million) that could help to prop up the loss-making business as its challenges mount, according to sources.

The provider of the funding is unclear, although it seems likely to have come from an existing stakeholder keen to protect its investment in the company.

Based in Toulouse, Sigfox provides low-cost connectivity for smart meters and other Internet of Things devices. Its technology, which uses unlicensed spectrum, is far more economical than rival cellular systems, say its supporters. It is building networks in dozens of countries with service provider partners, and operating its own infrastructure in France, Germany, Spain and the US.

Sigfox last announced funding at the end of 2016, when it claimed to have secured €150 million ($184.9 million, at today's exchange rate) from partners including Salesforce.com Inc. and energy company Total. (See Sigfox Defies Critics to Raise €150M in Funding.)

Since it was founded in 2009, Sigfox has raised a total of €277 million ($341 million), according to Crunchbase. Investment has come from organizations including Bpifrance, a government-backed fund in France, semiconductor giant Intel Corp. (Nasdaq: INTC) and other investment companies.

Telecom operators SK Telecom (Nasdaq: SKM), Telefónica and NTT DoCoMo Inc. (NYSE: DCM) also participated in a Series D funding round that raised €100 million ($123 million) in February 2015.

But recent earnings performance and statements in the mainstream French press have raised questions about the financial health of Sigfox and its long-term prospects. (See French Toast? Sigfox on Skid Row.)

In February 2016, it was reported by French newspapers to be on the prowl for as much as €500 million ($616 million) to support international expansion. The amount it raised later that year was at least €350 million ($431 million) below this figure. It does not appear to have raised additional funds since then.

Sigfox claims to have generated revenues of €50 million ($62 million) in 2017, up from €32 million ($39 million) in 2016 but well below a target of €60 million ($74 million). It does not expect to become profitable until the end of this year and has delayed its planned initial public offering (IPO) until 2019, having previously aimed for an IPO this year. (See Sigfox to Go Public in 2018 – Report.)

It also missed a goal of covering 40% of the US population with its network last year, it confirmed to Fierce Wireless in January, and has revised down the number of devices on its network. (See Sigfox in the City: 100+ Markets up in the US.)

After previously claiming to support 10 million connections, Sigfox revealed that only 2.5 million were active at the start of the year. It January it said it was aiming for 10 million by the end of 2018, but that figure was lowered to 6 million just a few weeks later.

One source estimates it would cost Sigfox about $200 million to complete network rollout in the US and another $20 million to finish building a network in Germany.

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Staff numbers at the company have soared to more than 370 from fewer than 200 just over two years ago, although a number of management figures have quit in the last year, including the former heads of the company's North American and Middle Eastern businesses and its deputy CEO. (See Sigfox Loses Networks Boss Fruges – Sources, Sigfox Sheds More Senior Staff, Including North America CEO, Sigfox CIO Said to Be Latest Senior Exec to Depart, Sigfox in Peril as Senior Execs Exit – Sources and Sigfox MEA President Hits the Road, Jacques.)

Several former executives say they left after clashing on company strategy with Ludovic Le Moan, Sigfox's co-founder and CEO.

Philippe Imoucha, the former cloud director, became the latest senior executive to leave Sigfox when he was recently fired amid reports of problems with the company's operational support systems, according to Light Reading's sources. (See Sigfox Cloud Boss Fired Amid OSS Problems – Sources.)

Despite the attractions of its technology, one of Sigfox's biggest problems this year is the emergence of NB-IoT, a cellular rival, as a low-cost challenger.

While it may struggle to match Sigfox on price, NB-IoT has the backing of many of the world's biggest mobile operators and some of its largest equipment makers. China's Huawei, which has made heavy investments in the standard, predicts there will be more than 150 million NB-IoT connections by the end of the year.

Sigfox also faces a challenge from LoRa, another unlicensed spectrum technology that appears to have a much broader ecosystem.

Semtech Corp. (Nasdaq: SMTC), the Californian chipmaker behind LoRa technology, now claims to have sold more than 50 million chips that will support LoRa connections.

Sigfox's press department has not responded to requests for comment on the issues covered in this story.

— Iain Morris, News Editor, Light Reading