The space is very visible now. Witness what happened to WJCI yesterday. There were three VC deals announced a couple of weeks ago and Howard Rheingold's article will inspire some copycat coverage.
Investors Throw Kegger for RF ID
Jerry Borrell
Sep 22, 2003
ventureconomics.com
Denver-based TrenStar Inc. has the distinction of being the only venture-backed company that Homer Simpson might possibly understand. Forget it's fancy radio frequency identification (RF ID) technology. It's all about the beer.
Mmmmmmmm, beer.
Trenstar is one of three RF ID companies that bagged a combined $62 million last week. But it is the only one of the three that can lay claim to keeping tabs on more than 3 million kegs for beermakers Carlsberg-Tetley and Scottish Courage.
If RF tags can track that most precious cargo, then they can certainly track just about anything else they can be affixed to. The possibilities are endless. And that's what has investors raising their glasses to the technology.
Besides Trenstar, which pulled in a $34 millon Series A, VCs sprayed a $16.5 million Series A on Los Gatos, Calif.-based RFco Inc. and a $11.5 million Series A on Watertown, Mass.-based OATSystems Inc.
All three deals were announced last week and coincided with the first annual Electronic Product Code Executive Symposium, the largest gathering ever for the growing world of RF ID interests, sponsored by EPCglobal Inc. and the Auto-ID Center. The event attracted 1,000 attendees and 25 exhibitors in Chicago for three days to discuss the future of RF ID.
Other announcements included a unifying of the leading industry standards groups and a next generation of lower cost tag readers from Intel Corp.
It had already been a good summer for RFID venture investing with Alien Technology having received a $38 million Series F in July. Power Paper of Israel raised a $15 million Series D in July, and Matrics also raised a Series B $20 million round in July.
Auto-ID Center Executive Director Kevin Ashton says that last week's conference and funding announcements marked the shift of RF ID from Cinderella technology to reality. RF ID products and technology have actually been lodged in the world of incipient technology for over a decade. Texas Instruments founded an RF ID product division in 1991. And Wal-Mart recently announced a formal plan of implementation that requires its largest 100 suppliers to implement RF ID by 2005.
For the uninitiated, RFID uses either passive or active semiconductor chips that attach to products and which can carry a wealth of information, such as cost, location, and the role that the product plays in the supply chain of a given company.
These tags are the center of a complex RFID infrastructure that includes tag readers, reader and tag manufacturing, and Internet connectivity.
The Carlyle Group has been among the most active of VCs in RFID companies, taking part in the recent rounds for TrenStar and Matrics.
TrenStar is a two-year old company that will, according to company CEO and President Greg Cronin use 95% of the large sum it has raised to purchase assets to support its role in logistics for brewing and processing foods. It works with corporations such as Carlsberg and Kraft Foods, providing RFID-equipped shipping containers for these multinational companies. The investment also allows TrenStar to look at other vertical markets such as artificial rubber and automotive supplies in which it will need considerable resources to participate.
Carlyle's VC lead for the TrenStar deal, Principal Anand Gowda, says, "$34 million is a lot of money. But this isn't two guys and a business plan. It's working capital for a company that is growing a dominant position in its market."
"There is not great deal flow in RFID investments right now,' Ashton says. But that may change, as a result of last week's funding announcements and conference. "We'll see a lot of VCs who are going to create their own deals in order to enter the RFID market," he says. |
