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Money continues to flow into RFID;
ThingMagic latest to benefit

11/17/08 | John R. Johnson | email

What recession? Although the economy continues to limp along, you wouldn't know it based on the excitement building around RFID technology. New money continues to pour into the sector, with today's funding announced by ThingMagic the latest example of the confidence placed in the industry by investors. The Cambridge, Mass. based firm inked a strategic investment and technology development agreement with In-Q-Tel.

"Investment continues to push forward and I think that's great news for the industry."
Mike Liard, research director for RFID & contactless at ABI Research.

The ThingMagic deal follows the $38 million round of funding announced by Alien Technology in early October, and the $3 million in funding secured by Advanced ID this week. ThingMagic did not reveal the size of its latest investment, although In-Q-Tel typically caps its funding at $3 million per investment.

In-Q-Tel is an independent strategic investment firm that identifies innovative technology solutions to support the mission of the broader U.S. intelligence community. It was launched by the CIA in 1999. In-Q-Tel has made numerous investments in wireless firms, but this appears to be the first pure RFID play it has invested in. The group has investments in more than 50 technology companies.

"Investment continues to push forward and I think that's great news for the industry," said Mike Liard, research director for RFID & contactless at ABI Research. "In dire economic times this is a good sign for RFID and it holds the promise of RFID."

"ThingMagic is a critical addition to our portfolio of wireless technologies," said Ben Levitan, a partner at In-Q-Tel. "We review thousands of innovative business plans but invest in only those few that address the most difficult technology challenges faced by both commercial enterprises and the national security community. ThingMagic's innovative RFID technology and research on wireless sensors offers great promise for both the private and public sectors."

In a release, ThingMagic CEO Tom Grant said the deal will enable the company to expand and customize its RFID reader platform and product form factors, and eventually enable the use of RFID and sensors in more innovative public and private sector asset tracking, supply chain, inventory control and loss prevention applications. ThingMagic also received a $9.5 million round of funding in summer of 2007, and raised about $20 million in 2005 and 2006 from investors including Cisco, Tudor Ventures, The Exxel Group, Morningside Technology Ventures and .406 Ventures.

Steve King, vice president of business development and planning at ThingMagic, said it is difficult to predict future business trends because of the current economy, and that he has even quit trying to give economic forecasts to the ThingMagic board.

"It's been interesting following our sales," said King. "In September our business just stopped, and that seemed true for everyone. Then our business started again and it was fine, and then in early November we had a bad week but then it came back again. We literally had two different one week periods where business stopped, and we hear the same stories from other companies as well."

The latest Alien financing was led by existing investors Advanced Equities, New Enterprise Associates (NEA), Rho Ventures and Sunbridge Partners. Despite difficult worldwide economic conditions, Alien's expected product revenue for its recently completed fiscal year 2008 grew approximately more than 50 percent over 2007. The company says that it realized record breaking inlay volume sales in every quarter in 2008, placing inlay volume growth above 76 percent over 2007 levels.

In a press release, Advanced ID president Dan Finch says the $3 million investment by La Jolla Cove Investors "significantly paves the way for us to attain profitability in 2009." The company will use the new capital to speed up growth in Asia, and for its global tire market initiatives.

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