The origins of Red Funnel date back to 1820, when the "Isle of Wight Royal Mail Steam Packet Company" was established by Cowes interests to operate the first steamer service from there to Southampton. In 1826, the "Isle of Wight Steam Packet Company" was formed in Southampton, and by the following year the two companies had started co-ordinating their operations. In 1860, the "Southampton, Isle of Wight & Portsmouth Improved Steamboat Company" was created to compete with the two established operators, and the threat posed caused the two older companies to merge. They subsequently acquired the assets of the Improved Steamboat Company in 1865.