Archive for the ‘Funding & Venture Capital’ Category

Stock market collapse could jeopardize Impinj IPO

Wednesday, August 10th, 2011

The recent and dramatic downturn in the stock market could spell bad news for Impinj’s bid to go public. According to an AP report, eight IPOs have been cancelled this week alone, with one more reducing its price as a turbulent stock market has caused many investors to flee stocks.

Only one company has gone public this month after eight IPOs were launched in the last week of July. The Impinj deal has yet to be priced. However, the company hopes to raise about $100 million from the IPO.

Financial experts say that it often takes between six months and a year to complete an IPO. The general consensus is that the Impinj offering will be priced between mid-August and the end of September. Impinj and online real estate firm Zillow both filed their S1 statements on the same day; Zillow went public two weeks ago. 

A cancelled IPO would certainly disappoint investors who have sunk more than $150 million into the leading producer of tag and reader ICs for the burgeoning EPC market. However, it wouldn’t have an entirely negative impact on the industry. For starters, the current market conditions are out of Impinj’s control and do not reflect the overall strength of the RFID sector and Impinj’s market leading position.

Just the same, a successful IPO “would definitely show that the core component of the industry – the tag and the reader — is a growing market and that there is a growing demand for it,” says one industry insider.

To draw a parallel between a cancelled Impinj IPO and the failed Alien IPO from four years ago would be unfair. Alien was a victim of untimely market conditions, but that was only half the story. Investors also had serious concerns about Alien’s business plan and the overall acceptance of RFID back in 2008. Today’s market, however, features strong orders and growing momentum. Impinj grew sales from $20.8 million in 2009 to $31.8 million last year. First quarter revenue for 2011 came in at $12.2 million, compared with $5.1 million for the same period last year.

Impinj has sold over two billion of its Monza tag ICs since the product line was introduced in 2005, including 940 million tags in 2010 alone. VDC Research projects the number of UHF Gen2 ICs shipped will grow from 1.6 billion in 2010 to 41 billion in 2015, a compound annual growth rate of 92.2 percent. Investors drool over such growth numbers, and such explosive growth should also push Impinj to a profit.

Click here to view RFID 24-7’s previous coverage of the pending Impinj IPO.

Invengo raises $108M through private placement stock offering

Thursday, August 4th, 2011

On a day when the stock market lost 4 percent in its biggest drop since 2008, Invengo announced it has raised $108 million (US) through a private placement stock offering.

The firm, based in Shenzhen, China with U.S. offices in Washington DC and Seattle, will use the cash infusion to introduce several new products over the next few weeks. In preparing for wider acceptance of RFID, Invengo will also increase stock levels and invest in larger local facilities including lab, training, quality control and warehouse space.

The proceeds raised will be invested in five projects, which are expected to consume $123M (US) in investment capital. Specifically, the projects include the commercialization of the Internet-Of-Things, RFID handhelds, a management system for RFID-based railway vehicle parts, research and development into an automated library system, and developing tracking devices for trains.

Invengo is a public company valued at $1.3 billion, employing over 600 people globally. The company designs and manufactures a complete range of UHF inlays, readers and complete RFID system solutions for multiple RFID applications such as apparel, logistics tracking, library, health care, manufacturing, temperature monitoring, pharmaceuticals.

 

Impinj IPO will ignite investment in RFID sector

Wednesday, April 27th, 2011

In late 2005, I predicted in another publication that a young upstart company called Impinj would some day file for an IPO. Six years later that time has arrived. In case you missed this week’s coverage of the Impinj IPO announcement, we have included it on our blog page.

Four years ago, Alien Technology created a buzz in the industry by filing for an IPO. Buzz quickly turned to bust because of poor market timing, a balance sheet that didn’t please investors, and orders that never materialized.

How is last week’s announcement by Impinj to pursue an IPO possibly worth $100 million any different? Like Alien, Impinj has never turned a profit. Impinj lost $11.4 million in 2010, and $1.8 million in Q1 2011.

Well, the losses are the only similarity, and they carry an asterisk, since tag sales are exploding, something that was not true four years ago. Today’s market features real orders and strong momentum. Impinj grew sales from $20.8 million in 2009 to $31.8 million last year. First quarter revenue for 2011 came in at $12.2 million, compared with $5.1 million for the same period last year.

“There is a different story here,” notes Drew Nathanson, Auto-ID practice director at VDC Research. “When Alien announced its IPO, the market wasn’t there yet. This is real money coming in.”

“And even though Impinj is not profitable, it is clear they will be eventually because they own so much share in a lot of these core markets that are growing at huge rates.”

Impinj will not comment on the IPO because of SEC regulations, but the company will not be profitable in the near-term. However, explosive growth is occurring in the apparel item-level sector, an industry Impinj is a big player in. And Impinj execs see item level tagging spreading quickly into non-apparel sectors like electronics, cosmetics, tires and jewelry. In fact, it is highly believed that Walmart is ready to extend its item level-tagging program to electronics and tires and possibly other non-apparel product lines before year-end.

Impinj has sold over two billion of its Monza tag ICs since the product line was introduced in 2005, including 940 million tags in 2010 alone. VDC projects the number of UHF Gen2 ICs shipped will grow from 1.6 billion in 2010 to 41 billion in 2015, a compound annual growth rate of 92.2 percent. Investors drool over such growth numbers, and such explosive growth should also push Impinj to a profit.

Impinj focuses exclusively on UHF RFID solutions, which is the fastest growing segment of the RFID market. UHF Gen2 systems are ideally suited for high-volume, item-level applications that require low-cost, consumable tags, such as retail inventory management, pharmaceutical authentication and airline baggage tracking. From 2009 to 2010, unit sales of the Monza UHF Gen2 tag ICs increased by 279 percent. Impinj is the market leader in UHF Gen2 tag ICs, reader ICs and stationary readers. According to VDC, Impinj owns 60 percent of the tag IC market, 86 percent of the reader IC market and a 25 percent share of the stationary reader market.

Impinj estimates that its technology enables more than 70 percent of the UHF Gen2 reader market when you combine the share of its Speedway reader with that of other readers based on its Indy reader ICs.

“Their innovation rate is aligned and they seem to have a very good understanding of how their markets are evolving and the constantly changing end user requirements,” says Nathanson.

Impinj will use the proceeds of the IPO to pay down debt, including venture firms that have financed the company to the tune of at least $160 million since it was founded in 2000. Published reports say that venture capital firms own about half of the company. Intel holds a stake worth about 6 percent.

A successful IPO would drive further investment in the industry, resulting in the potential for more IPOs and increased M&A activity. A year ago, RFID 24-7 reported that ODIN could be 12-18 months away from filing an IPO. Privately held ODIN has never commented on its sales, although industry estimates place revenue at $25-30 million annually. That puts ODIN at about the same size sales-wise as Impinj. ODIN CEO Patrick Sweeney said this month that first quarter sales increased by 30 percent in 2011, indicating continued solid growth.

Is ODIN on track for an IPO too? All you have to do is read into Sweeney’s blog post regarding the Impinj IPO: “The big winner will be the second company to IPO, because everyone who is sitting on the sidelines during Impinj’s road show is about to see a very successful tech company emerge and will wish they got in on Impinj; and they will climb all over themselves to get in on the second IPO in the RFID sector. If Impinj is successful, and I believe they will be, and I owned an RFID company I would be doing everything I could to be the second company out in the IPO market.”

ODIN, which acquired Reva Systems late last year, is also a potential takeover target, as are companies like GlobeRanger, Tego, Omni-ID, and Intelleflex, especially if momentum behind cold chain tracking continues.

The Impinj IPO places a spotlight on a pure-play RFID star. A successful IPO means investors will take note that the technology is finally mature and that they can invest in the industry and reap gains in the short term, instead of waiting years for payback.

“The call volume coming in from the investment community, especially the larger investment firms, indicates that they are really looking at this market in a big way,” says one industry expert. “They are looking to dump more money in, so expect a lot of acquisitions happening going forward.”

 

Impinj files to raise up to $100M in IPO

Thursday, April 21st, 2011

Investors in Impinj may finally have a way to cash out of the company. Impinj announced on Thursday that it is filing for an initial public offering that could raise as much as $100 million. Impinj could be trading by year end, and would be the first North American-based RFID pure play to test public markets.

Impinj was founded in 2000, and has raised more than $150 million from venture capital firms. Much of the IPO proceeds will go to pay off investors, while the company will also invest in product development and expanding the business.

Stay tuned to RFID 24-7 next week for much more on this developing story. For now, check out the Seattle Times article.

Omnitrol financing will extend adoption of its real-time operational intelligence platform

Tuesday, November 30th, 2010

Omnitrol Networks announced today that it has closed a round of financing with Javelin Venture Partners and several existing investors, raising the company’s total investment since inception to approximately $15 million. The cash infusion will be used to expand sales and marketing, and help accelerate key initiatives in response to sustained industry growth. Omnitrol is expected to announce major partnerships in the next several months.

“We see a substantial market opportunity for companies who can leverage an ‘Internet of Things’ infrastructure to provide real-time intelligence on the status, location and condition of assets,” said Jed Katz, Managing Director of Javelin Venture Partners. “Omnitrol has become a leader in this sector, and we are excited about supporting their long-term plans.”

Omnitrol has deployed its platform and solutions with industry leading companies in aerospace & defense, manufacturing, logistics, food & beverage and retail-store operations.

“Rapid growth and adoption of wireless, RFID and location-based sensor technologies has accelerated demand for Omnitrol’s highly scalable software platform,” said CEO Raj Saksena. “Customers and partners building solutions on our platform are able to achieve new heights in financial performance by significantly improving customer satisfaction and reducing costs. Our customers automatically share information accurately and quickly in real-time from shop-floor operations creating a smarter and more collaborative supply-chain with their business partners.”

ThingMagic buyout could ignite next round of RFID M&A

Thursday, October 28th, 2010

For those that didn’t receive this week’s edition of RFID 24-7, we’ve posted our lead story here for you.

When ThingMagic got its start in a garage in Somerville, Mass., 10 years ago, the firm’s co-founders probably never considered that the company would be scooped up a decade later by a billion-dollar buyer.

That’s exactly what happened yesterday when ThingMagic, in the midst of a year-long 10th anniversary celebration, was quietly acquired by Trimble, a California firm that specializes in making field and mobile workers more productive through wireless technologies like GPS, lasers and optics — and now — RFID technology.

No purchase price has been announced, but several sources indicate that ThingMagic is enjoying its best year, which could translate to a fair to high multiple. ThingMagic was not in the position of needing to sell, and CEO Tom Grant likely negotiated mostly out of a position of strength.

“Tom didn’t have to sell,” says an industry insider. “They were having a pretty good year, so I can imagine that the multiple was pretty good.”

Two circumstances could be behind the decision to sell. Company investors, some who have been invested in the firm for several years, may have started to grow anxious for an exit. ThingMagic’s last round of major financing came in 2008, when it raised $9.5 million from four venture firms.

Like OAT Systems, which was purchased by Checkpoint in 2008, ThingMagic was born out of the Auto-ID Lab at MIT. It’s also likely that the company required additional capital in order to scale. Now they have it in Trimble, which carries a $4.3 billion market cap and will likely look to ThingMagic’s line of fixed readers and its high quality module piece to extend its business proposition for its customers.

ThingMagic’s decision to move aggressively into modules several years ago while de-emphasizing a lackluster fixed reader business not only provided a high-quality module option for the industry, but likely saved the company’s business.

Although neither company commented on the value of the deal, the purchase price will eventually be revealed when Trimble, a public company, files its annual report.

The deal raises the question of who will be the next buyout target. With the economy continuing its slow recovery, and RFID gaining steam almost every day — primarily through the huge retail apparel deals in the works with Wal-Mart and other top retailers — the ThingMagic deal could represent just the tip of the iceberg when it comes to M&A activity.

“When you start to see companies turning away business [because they are too busy] and you start to see product shortages and high-multiple acquisitions, it’s a sign that the industry has crossed the chasm,” says Patrick Sweeney, founder and CEO of ODIN. Sweeney believes that merger activity will reach a fever pitch as companies like Trimble decide that they need a presence in the RFID market. “It looks like 2011 will be huge,” he says. “By the end of 2011, there will be one or two RFID pure plays left standing.”

Who are the possible targets? ODIN, for one, is likely on the list. While Sweeney won’t comment about any offers he has received, he has been positioning the company as more of a software firm than a services provider, which should make ODIN more valuable moving forward. In April, RFID 24-7 reported that there was likely more to the partnership ODIN signed with Savi that allowed the pair to offer the first software platform leveraging both passive and active RFID technologies. At the time, RFID 24-7 reported that the deal likely represented a second and less desired option for Savi, which may have preferred to purchase ODIN instead. If such an offer was made, Sweeney wisely declined, knowing the value of his company would only climb. Down the road, ODIN would be a good fit for IBM or Motorola moving forward.

A host of companies that have carved out niche markets could also be M&A candidates. WinWare, Inc., which produces CribMaster, for example, could be a likely target for a larger material handling provider or system integrator looking for a presence in the MRO and manufacturing sector. CribMaster offers RFID-enhanced and automated tool cribs and vending machines. FileTrail, a provider of records management software and RFID tracking solutions, has also carved out an attractive niche that may attract suitors. Rush Tracking, which was acquired by venture firm Pharos Capital last year, could be put into play at some point. VC’s don’t typically buy companies with the goal of running them; they all have exit strategies in mind.

Seattle-based Impinj could also be a major acquisition candidate. The rapidly-growing Impinj has more than a dozen venture investors on the books, and expects to double sales next year, according to an article in Xconomy Seattle. Impinj has raised more than $100 million in venture funding, and those investors expect to be repaid at some point, either through a public stock offering or a buyout.

“We’ve seen pockets of consolidation occurring in RFID over the past few years,” says Michael Liard, RFID practice director for ABI Research. “Do I think it’s the start of a snowball effect? I’m not sure. Somebody else will be next, maybe a software player. I expect more in the future. It needs to happen and speaks to the fragmentation and the number of players in the value chain today.”

RFID pioneer ThingMagic purchased by Trimble

Monday, October 25th, 2010

RFID pioneer ThingMagic, in the midst of a high-profile 10th anniversary celebration, upped the ante today. The firm announced that it has been sold to California-based and publicly-traded Trimble.

ThingMagic was born out of the former Auto-ID Center at MIT. According to the press release issued by Trimble, ThingMagic will continue to offer high-performance fixed and embedded RFID readers and services to customers in a wide range of industry verticals from construction to transportation.

It was not immediately known if ThingMagic will remain in its Cambridge, Mass., headquarters, or the fate of its management team, which includes four original co-founders, including Yael Maguire.

The sale likely represents an exit plan for the investors who have put more than $30 million in venture funding into the firm since its inception. ThingMagic’s last funding occurred in 2008 in a deal with In-Q-Tel thought to be worth about $3 million. In-Q-Tel is the strategic, not-for-profit investment firm that works to identify, adapt, and deliver innovative technology solutions to support the mission of the U.S. Intelligence Community

“Adding ThingMagic’s RFID technology and system integration expertise will allow Trimble to build more comprehensive and capable solutions for its existing markets and potentially provide entry into new markets,” said Jürgen Kliem, vice president of Trimble’s strategy and business development. “Similar to the widespread integration of GPS into today’s positioning solutions, we believe RFID can transform markets and is a natural complement to our existing technology portfolio.”

Why the U.S. won’t fund RFID research

Monday, June 21st, 2010

For those of you that didn’t see last week’s newsletter, here is the lead story.

In March, Patrick Sweeney joined two dozen small business executives at the White House to watch President Obama sign a job stimulation bill for small businesses.

As he stood in the Rose Garden, Sweeney, the CEO of ODIN technologies in Ashburn, Va., thought about how nice it would be if more government funding was directed toward RFID and other technologies with game-changing potential for industry. Government-backed research grants could provide a much-needed additional push for RFID technology.

But as the European Union and other countries continue to heavily fund RFID research and pilot programs, U.S.-based RFID providers are mostly on their own. Sure, there are isolated government backed initiatives through NIST and the Department of Defense, but that funding doesn’t come close to matching the support technology providers receive overseas.

“It’s very disappointing,” says Kathleen Carroll, director of government relations at HID Global. “It’s interesting to me that Europe is ahead of us not only in looking at policy issues on RFID, but also in the implementation of RFID and in looking at different ways to deploy it.”

Most recently, the EU announced a plan to fund research to measure the return on investment for RFID when it comes to small and medium size businesses in Europe. That’s exactly the kind of initiative that would further drive RFID usage in the U.S. Earlier this year, Korea gave RFID a shot in the arm when it announced that more than 50 percent of pharmaceuticals in that country will need to carry RFID tags by 2015.

The EU project began in May and will run for two years, conducting tests at eight locations in six countries across multiple industries. The project’s goal is to allow SME’s to fully understand and leverage the potential benefits of RFID.

Dubbed the “RFID-ROI-SME” project, the goal is to boost the adoption of RFID technology by wide SME communities, while at the same time creating business opportunities for innovative RFID solution providers in the EU. Benefits will then be disseminated to wider SME communities in the form of case studies, best practices and blueprints.

In addition, the EU sponsored the recently-concluded two-year BRIDGE project, designed to address ways to resolve the barriers to the implementation of RFID and EPCglobal technologies. Those kinds of initiatives in the U.S. could help a host of small enterprises that believe RFID is out of reach do to pricing and scaling concerns.

“I don’t think we’ll ever see anything where the government funds technology research within private companies,” says Sweeney, whose company has numerous contracts with the DOD. “It’s a very different model between the U.S. and Europe. The whole purpose of the EU research is to figure how these solutions can scale and change the way small businesses work. The U.S. would never attempt to something that bold.”

In fairness, there are some examples of government working with the industry. When UMass-Lowell broke ground on its $70 million Emerging Technologies and Innovation Center this month, it did so with a stash of grant money, albeit from the state of Massachusetts, not the federal government. The Center’s primary focus will be on RFID technology.

And the Commerce Department has been fairly active working with the EU on RFID pilots, including the Lighthouse Project. Last year, SecureRF Corp. was awarded a Phase II Small Business Innovation Research (SBIR) grant from the National Science Foundation to develop a secure RFID tag for the pharma supply chain. SecureRF received $500,000. Other SBIR grants have been awarded to RFID firms in the past.

But while European firms rely on federal money, most of the research centered in the U.S. originates in the DOD and at universities like MIT and the University of Arkansas, which both have thriving RFID labs. In fact, the number of universities with RFID programs is growing rapidly. Rutgers University recently launched an RFID center in a partnership with Tagsource.

“It absolutely has to happen at the university level,” says Michael Ohanian, the former president of Intermec Technologies who is still active as an industry consultant. “But we need collaboration with industry. If these universities don’t get some funding, they can’t do anything.” Ohanian points to the RFID Solutions Center in Dayton , Ohio, a collaboration with several universities that received federal and state funding, as well as private money from Alien Technology. “That’s the kind of collaboration and funding that you need,” he says.

In addition to university-sponsored research, the federal government will continue to fund projects through the DOD, which also partners with universities. UMass- Lowell recently received $4 million to advance nanomanufacturing research and development, mostly for applications that will protect soldiers from biological and chemical substances during warfare.

“There will continue to be a combination between academia and the DOD,” says Sweeney. “Historically, most of the big technology breakthroughs in the U.S. have come out of the DOD or NIST, the Internet and GPS being prime examples. That’s because those developments end up being breakthrough technologies that dramatically change the battle field, as opposed to something that will help a small business to run more efficiently.”

That’s something the U.S. government might want to examine further if it is to maintain its foothold as a leader in innovation, technology and business.

Koa tree article feedback from around the globe

Monday, May 10th, 2010

Received some great feedback from last week’s article about the use of RFID to tag individual Koa trees on a plantation on Hawaii. The RFID tree tracking database being developed by Hawaiian Legacy Hardwoods (HLH) will allow investors in the HLH Koa reforestation project to track and monitor the progress of their investment in real time. The company embedded about 20,000 RFID tags into its new crop of trees this year, and looks to increase that to 100,000 trees during the next growing season. Within two years HLH will tag at least 250,000 new trees as it moves toward planting 1.3 million Koa trees.

One comment comes from David Ong, Managing Director of  Tripro Technology Sdn Bhd. His firm is working on a pilot project to help to create a RFID system to assist the Malaysian Forestry Department to track and manage its forest inventory. “With the availability of this new RFID application, it will indeed accelerate our objective,” he says.

And the folks at I.D.ology in Wisconsin wrote to tell us that while they have been busy with tagging and micro-chipping cattle to deal with food safety concerns, they have also come up with programs to tag field crops and link the crop to a GPS originated, location specific, date and time stamp to accompany fertilization and harvesting data.

Looks like Hawaiian Legacy Hardwoods won’t be the “only ones on the planet” doing this for long!

Keep the feedback coming!

Item-level provider TAGSYS raises $12M in venture funding

Tuesday, March 16th, 2010

The investment community continues to channel cash into the RFID sector. The latest beneficiary, item-level RFID infrastructure provider TAGSYS, has pulled in $12 million from five investors. The announcement follows those from Alien Technology, which raised $10.9 million, and RTLS provider Awarepoint, which raised $10 million.

TAGSYS marketing director Maria Kaganov says the new funding will help the firm to expand its distribution channels, assist partners in securing new markets, and allow TAGSYS to continue to develop UHF and HF solutions optimized for item-level applications for a variety of markets including library, textile services, brand and fashion and healthcare. Specifically, Kaganov sees the funding helping to expand the firm’s retail solutions into the U.S. market, and its textile solutions into the Middle East and Asia.

TAGSYS’ business model provides complete purpose-built infrastructure to customers, and has led to wins in several major applications during the last 12 months, including item-level supply chain projects in the fashion sector with Rica Lewis and Serge Blanco. The companies use TAGSYS solutions to track millions of clothing items, and to manage in-store inventory at leading European retailers including Carrefour, Auchan and Intermarché.

“After years of over-hyped expectations, the RFID market has reached a stage of maturity where customers are focused on the proven tangible benefits of RFID and using practical, real-world solutions to gain competitive operational advantage,” Bernard Vogel, of venture firm Endeavour Vision, said in a press release. “Industry leading RFID solutions-based companies such as TAGSYS are at the forefront in delivering this competitive advantage to leading companies around the globe.”