How Can We Pay for This? The smart-city capital relay

BlocPower had $150 million of financing and a citywide electrification ambition in Ithaca. It still withdrew after completing only ten buildings. The lesson runs through smart-city projects from Kenya to Brazil: money is useful only when customers, payments, permissions and delivery are already aligned. The strongest projects use equity and grants to prove the model, contracts to prove demand, and long-term finance to fund assets with visible cash flows.

In November 2024, BlocPower withdrew from Ithaca.

The New York city had selected the American building-electrification company to help electrify approximately 6,000 buildings. BlocPower had announced $150 million of financing only 20 months earlier, including more than $24 million of equity and $130 million of Goldman Sachs-led debt. Its offer was attractive on paper: 15-year leases with no money down.

Yet only ten buildings had been completed when the company left, according to Ithaca’s sustainability director. The original consortium had dissipated. Grants had expired. Building-owner participation, which was voluntary, proved difficult.

This is the question underneath almost every smart-city pitch: if the money is there, why does the project still stall?

Because capital cannot substitute for contracted demand and coordinated delivery.

That is the central mistake in this field. Founders often assume the sequence is simple: raise a large venture round, build the technology, run municipal pilots and wait for cities or residents to buy. But a smart-city project is rarely one risk. It is several risks wearing the same lanyard: whether the technology works, whether a customer will pay, whether public procurement permits the purchase, and whether a physical asset can earn enough to repay its financing.

Different money belongs to different problems. Grants can pay for experimentation and public benefit. Equity, or ownership capital, can fund a team and early operating proof. Customer deposits and contracts show that demand is real. Long-term debt, money repaid over time, can fund buses, lights or energy equipment when payments are visible.

BlocPower had capital. What it lacked was the hard commercial evidence that made that capital safely deployable at scale.

The city endorsement trap

At first glance, public-sector support looks like the prize. Cities have buildings, streets, budgets and urgent climate targets. Surely a municipal endorsement is the signal investors need?

Often it is only the beginning.

India’s Smart Cities Mission is a useful corrective because it shows where the money was expected to come from in practice. The Ministry of Housing and Urban Affairs reported in 2024 that 61% of mission funding was expected from central and state government, with another 24% coming through convergence with other public programmes. Public-private partnerships, or PPPs, were expected to provide 4%. Loans accounted for 2%.

The ministry’s 2023-24 annual report also records the February 2024 parliamentary evaluation finding that half of participating cities had undertaken no PPP project. The source matters because this claim is often repeated as a broad judgement on Indian cities. It is a specific finding in the official record, not a guess about private finance.

What surprised us was not that private capital played a smaller role than the rhetoric suggests. It was how plainly the numbers explain why founders should not build a plan around a city quickly approving a novel financing structure.

Public money is often the foundation. Customer commitment is the proof. Private capital comes in once the payment route is credible.

That distinction is the difference between interest and investability.

Masdar City. Photo: Renek78 / Wikimedia Commons, CC BY-SA 4.0.

BasiGo waited for the right moment to borrow

BasiGo, the electric-bus company operating in Kenya and Rwanda, took a more patient route. It began passenger operations in Kenya in 2022 with equity-funded buses and pilots. Only after demonstrating its Pay-As-You-Drive model did it raise $42 million in October 2024.

The package included $24 million of Series A equity led by Africa50 and $17.5 million of debt from British International Investment and the US DFC. BasiGo targeted 1,000 buses within three years. Its strategic shareholders included CFAO Kenya and Toyota-affiliated Mobility54.

The structure mattered as much as the total. Operators pay a deposit, reported by P4G in May 2025 as approximately $8,000, then a per-kilometre charge covering the battery, charging and maintenance. BasiGo keeps exposure to the vehicle’s performance. If the bus is not available, its revenue suffers too.

By March 2025, British International Investment said the fleet had grown from 19 to 55 buses. It also reported approximately 1,600 tonnes of CO₂ avoided and operator earnings at least 20% higher. BasiGo CFO Jonathan Green said debt enabled bulk ordering and materially improved unit costs.

BasiGo used early equity to prove bus utilisation before adding debt for fleet scale. Photo: Bahnfrend / Wikimedia Commons, CC BY-SA 4.0.

The easy lesson is “debt funded growth”. That is not quite right.

BasiGo first proved utilisation. Private operators had daily fare revenue. The company had a payment mechanism tied to kilometres travelled. Only then did fleet assets begin to look less like a venture-backed burden and more like something that could support repayment.

Imagine you are an investor. Would you rather finance a hundred buses because a founder forecasts demand, or because operators are already paying to use buses and the operating model has survived real roads? The second answer is not glamorous. It is financeable.

This is why funding the proof rather than the fantasy matters so much in hardware and city-facing businesses. The next raise should buy the evidence needed to change the type of capital available to you.

Bristol sold a pipeline, not a pilot

Bristol City Leap, the 50:50 joint venture formed in January 2023 between Bristol City Council and Ameresco, took the opposite path from a startup selling one product at a time.

The United Kingdom partnership runs for 20 years. Vattenfall Heat UK is an essential subcontractor. Instead of separately tendering a heat network, renewable energy scheme, efficiency programme, electric-vehicle charging project and smart-energy service, Bristol assembled them under one long relationship.

The partnership was intended to mobilise more than £1 billion, including at least £424 million in its original five-year plan. Its updated first five-year investment ambition is approximately £750 million, according to Bristol City Leap’s published updated-plan announcement. In year one, the programme delivered £4 million of efficiency measures for lower-income households and upgrades to more than 200 homes.

Here is the twist: Bristol did not make individual technologies easier to finance by declaring them clever. It made a larger delivery system easier to finance by offering a pipeline, municipal participation and time.

A concession, a long contract giving a provider responsibility to deliver a service, can give capital providers something a standalone pilot cannot: a reason to plan. The investor can assess a stream of projects rather than repeatedly deciding whether a tiny demonstration will become a real business.

For founders, that should change the question. Do not only ask, “Will the city buy our product?” Ask, “Can our product sit inside a contracted programme with a delivery partner, assets and a credible route to repeat deployment?”

The pole project that had enough revenue and too little alignment

Bhopal’s smart-pole project in India shows why even a clever payment model has limits.

In 2017, Bhopal awarded Ericsson and Bharti Infratel a 15-year INR6.9 billion, or $98 million, DFBOOT concession. It covered 400 smart poles, 20,000 LED lights and 180 kilometres of fibre. The city contributed no investment.

Its repayment plan was inventive. A minimum 35% guaranteed energy saving was one source. Advertising and fibre revenue, shared with the city, were others. This is revenue stacking: using several genuine income streams so one municipal budget line does not have to carry the entire project.

Bhopal combined savings, advertising and fibre revenue, but governance gaps still damaged delivery. Photo: Giant Asparagus / Pexels, Pexels licence (free commercial use).

Then delivery ran into the thing finance decks tend to place in the smallest type. Poor coordination among the smart-city company, municipality and traffic police produced duplicated poles and traffic problems.

Put Bhopal and BlocPower side by side and a pattern appears that neither financing announcement says outright. One project had several revenue sources. The other had substantial capital. Both still depended on people outside the financing documents doing their part, consistently, over time.

Money can price equipment. It cannot quietly resolve who controls a street, approves a permit, owns the customer relationship or carries the political responsibility when installation disrupts traffic.

Brazil financed a service, not “smartness”

Belo Horizonte, the Brazilian city whose lighting PPP modernised 182,000 lighting points, provides the cleaner version of the model.

The 20-year project linked municipal remuneration to performance requirements. BHIP, the project company, reports that lighting failures fell from 6% to below 1%. Maintenance response times moved from as long as ten days to a maximum of 48 hours. Its financing was non-recourse, meaning repayment relied on project cash flows rather than a general claim on the sponsor.

The PPP also had World Bank-supported preparation and clearly structured guarantees. BHIP reports that the winning payment bid was more than 30% below the original level.

The interesting part is what was actually financed. Not an abstract promise of an intelligent city. A measurable service: lights working, faults addressed, payments tied to agreed standards.

That is a challenge to a common assumption. Technology does not create bankability by itself. Measurement, payment and accountability do.

When patient money still cannot hurry reality

Masdar City in the United Arab Emirates is the useful counterweight. It began as an approximately $20-22 billion state-backed attempt to create a carbon-neutral urban technology cluster. Yet research records that the 2008 financial crisis, cost realities and technical learning led to revised environmental ambitions and a much longer phased schedule.

Sovereign backing can sustain experimentation for decades. It cannot manufacture occupancy, tenant demand or viable real estate economics.

So the argument is not that projects need less capital. Some need a great deal. The argument is that capital works best after the commercial and delivery conditions it relies on have been made real.

GI Network’s view: The first question in a smart-city capital raise should not be “how much can we raise?” It should be “what payment, contract and delivery proof must exist before the next pound or dollar can be safely deployed?”

What operators should build before they pitch

Founders should make a capital map before making a pitch deck. Start with four stages: proving the product, proving a paid deployment, securing contracted rollout and funding long-lived assets.

For each stage, write down who pays, when they pay, what could stop delivery and what evidence unlocks the next stage. If customer participation is voluntary, say so. If a grant expires, model that risk. If installation needs permission from three public bodies, that is not an operational footnote. It is part of the investment case.

Seek paid pilots where possible. Secure deposits, service commitments or defined performance rules. Find strategic partners that reduce a real constraint, such as manufacturing, installation or access to procurement channels, rather than merely adding a famous logo.

And separate company finance from project finance. Equity may be right for the team, software and operating proof. It is often an expensive way to own assets that, after contracts are in place, could be supported by leases or debt.

What experienced investors look for

Experienced investors are not only judging the product. They are judging the handover between risks.

They will ask who ultimately pays. They will ask what triggers that payment, whether demand is signed or merely hoped for, and whether the economics survive if subsidies disappear. They will test whether permits, public approvals and customer onboarding can happen at the pace assumed in the model.

They will also ask whether the assets can stand on their own. BasiGo’s fleet had usage-linked revenue. Belo Horizonte had performance-linked municipal payments. Bristol had a long pipeline. BlocPower had a city target but struggled to secure building-level participation.

That is why ownership terms still matter, but they are not the whole story. As pro-rata rights in a UK fintech round illustrate, the rights around future funding can shape a company. In smart-city deployment, though, no elegant cap table can repair weak underlying demand.

GI Network would begin by stress-testing the proposed project against the actual payment route: who signs, who pays, what happens if public support changes, and which assets can be financed separately from the operating company. We would then align the evidence package, commercial documents and investor list with that sequence, including rehearsing the questions an investment committee will ask about procurement, delivery coordination and cash-flow resilience. For businesses seeking development-finance institutions, building evidence before seeking DFI capital is not optional preparation. It is the work.

The Smart City Capital Relay

The decision model to retain is the Smart City Capital Relay. Before accepting or seeking any source of money, test four handovers:

1. 1.Proof: What uncertainty is this capital paying to resolve: technology, customer demand or delivery?
2. 2.Payer: Who will pay once the pilot ends, and is that commitment signed, measurable and durable?
3. 3.Performance: What service level, saving or usage level makes payment predictable?
4. 4.Permission: Which public bodies, property owners and delivery partners must act before revenue can begin?

If one handover is missing, do not assume a bigger round fixes it. BlocPower is the warning. BasiGo is the alternative. Bristol and Belo Horizonte show what happens when the payment route and delivery structure arrive before the capital is asked to scale.

The relay works only when someone is ready to take the baton.