Global demand for bandwidth continues to grow rapidly and will continue to do so irrespective of changes in the macro environment. As a result, there is an increasing need for network infrastructure to support this demand. Investment in compute resources for AI workloads in data centers and at the edge will require corresponding investment in bandwidth. According to McKinsey, data traffic is expected to expand by around 20 percent annually over the next five years, and fiber is arguably the only fixed-broadband technology currently capable of delivering the speed and capacity expected by consumers, businesses, data centers, and carriers.
Fiber networks (ultra-thin glass strands transmitting data with light signals) are increasingly taking share from legacy technologies like DSL (copper lines) and cable (coaxial cables) because they are faster, more secure and can transmit data over longer distances. According to an analysis conducted by Deloitte Consulting, it is projected that the United States will need to invest between $130 billion and $150 billion in fiber infrastructure over the next five to seven years. This investment, which will likely come from a variety of sources (government subsidies, financial investors, public/private partnerships, service providers) is crucial to support broadband competition, expand coverage in rural areas, and enhance wireless networks.
While high-speed internet access is now fairly ubiquitous in major urban areas, that infrastructure is often lacking in smaller towns and rural areas. This need led Vero to enter its first business segment in 2018, Vero Fiber Networks (“VFN”). VFN builds custom dark fiber networks for customers like K-12 schools, local governments, hyperscalers (Meta, Amazon, Google, etc.), and mobile network operators (Verizon, T-Mobile, etc.), primarily in small towns across the western US.
As Vero executed the VFN business plan, they recognized that the dark fiber networks they own and continue to build could also serve as a valuable foundation on which they could build Fiber-to-the-Home/Premise (FTTH/FTTP) networks. This led to the creation of the Vero Broadband (“VB”) segment in early 2022, which builds fiber networks to households and businesses. VB delivers lit fiber connectivity to these premises and charges retail customers a reasonable monthly fee for high-speed internet.
This investment is the latest chapter of a story that goes back more than 20 years. Delta-v Partner, Rand Lewis, has made numerous investments in digital infrastructure at his prior firm, Centennial Ventures, and at Delta-v. One of those investments was Zayo. Rand initially invested in the Series A, and that business ultimately became one of the largest fiber providers in the country, going public in 2014 and being taken private in a $14 billion LBO in 2020. Vero’s CEO and most of the Vero management team were founding members and executives of Zayo. We have tracked Vero since they launched in 2018 and are pleased to partner once again with Matt Erickson, Greg Friedman, and the rest of the Vero team.
Rand Lewis, Partner at Delta-v
Leveraging our longstanding relationships and conviction in the market opportunity, we are proud to announce our investment in Vero, as the lead investor in their $80 million preferred equity financing alongside Hamilton Lane with participation from existing Vero investors. Vero has a proven track record of delivering on customer commitments through responsible capital deployment. With this new round of funding, we are proud to support Vero’s mission to provide greater access to high-speed internet in underserved geographies alongside the management team and existing investor syndicate.
Greg Friedman, CFO of Vero
