Internet startup Starry makes comeback from bankruptcy with new growth and profit goals

STARRY Group Holdings Inc, the Boston-based wireless broadband provider, is emerging from bankruptcy with a new leader who has a more sober view on growth and a rediscovered bias toward reaching profitability. 

The company filed for Chapter 11 protection in February and has restructured as a closely held venture, said a statement on Thursday (Aug 31). The board will include co-founders Alex Moulle-Berteaux  and Chet Kanojia.

Ditching earlier hyper-growth aspirations that ran aground when the capital markets dried up, Starry chief executive officer Moulle-Berteaux said he has a fully funded moderate-growth business plan that will get the company to break-even in two years or less. Moulle-Berteaux, a Starry co-founder, was previously the company’s chief operating officer.

Wireless broadband connections start at US$50 a month at Starry, which is cheaper than cable and landline Internet services. The company sells service in Boston, Los Angeles, New York City, Denver and Washington. Currently, it has fewer than 100,000 broadband subscribers, Moulle-Berteaux said.  

Starry’s second act comes at a highly competitive time in the broadband industry. All three of the major US mobile service providers have been using new super fast 5G networks to beam signals into homes to provide Internet access. The lower cost wireless broadband offerings, where Starry will be competing, have been popular with customers looking for cheaper alternatives to landline Internet offerings and have undercut subscriber growth at the cable companies including Comcast Corp and Charter Communications Inc. 

Starry was founded in 2014 and went public in 2021 through a merger with FirstMark Horizon Acquisition Corp, a special acquisition company (Spac). The company slashed costs in January, eliminating nearly a quarter of its staff prior to bankruptcy. It had won more than US$268 million in federal funding under the Rural Digital Opportunity Fund to help pay for broadband service expansion to nine states last year, but later backed out of the agreement.

Going the Spac route “was a poor decision” in retrospect, said Moulle-Berteaux. “It was a symptom of what was going on in the larger financial market, and the pressure on our capital-intensive growth plan. It was not a good outcome.”

Kanojia’s previous startup, Aereo, had a brilliant, but short, life. The company used tiny antennas to help consumers stream broadcast television cheaply. Aereo drew challenges from broadcasters and filed for bankruptcy after losing a legal battle that went all the way to the Supreme Court.

Broadband is seeing a renewed push from new technologies as well as billions in federal funding.

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“This period has tested everyone in the company, but through the support of our employees and customer we got through it,” Moulle-Berteaux said. “I think providing consumers a choice and better service still seems like a good mission.” BLOOMBERG