Motorola invests in RFID maker

Published 17 December 2007

Santa Clara-based Intelleflex raises $15.5 million from Motorola, Arcapita Ventures; the move may signal a change of attitude by VCs, who have so far failed to warm up to the technology; another RFID maker, Colorado-based SkyeTek, raised $10 million in July

Arcapita Ventures and Motorola Ventures last Thursday announced that they jointly made a $15.5 million investment in Santa Clara, California-based Intelleflex, a three-year-old RFID startup. RFID technology came on the scene a few years ago with much promise. Wal-Mart and the Pentagon, for example, said that they would require their suppliers to use the technology, and more and more governments moved to adopt e-documents (passports, driver’s licenses) which incorporated the technology. Still, Red Herring’s Cassimir Medford notes that venture investors’ appetite for radio frequency identification has been fading over the past few years despite steady growth in investment across most other technology segments. According to a recent report from the National Venture Capital Association, venture investment in RFID has nose-dived in the past three years. This slide in investment is occurring despite solid support — as noted above — for the technology from technology trendsetters such as the U.S. Department of Defense, Wal-Mart, and IBM.

Observers believe the technology’s progress has been slowed by the high cost of the main components, and VCs seem to be picking companies that have been able to drive down component prices. “We’ve invested in the integration to bring all our functionality down to a single chip in the $5 to $10 range, rather than the $50 to $100 range like other similar forms of RFID,” Intelleflex CEO Richard Bravman said. In July SkyeTek, a Westminster, Colorado-based maker of RFID readers, got $10 million in funding. SkyeTek claims to have reduced the cost of readers from $2,000 to $200. Intelleflex makes RFID tags and readers that operate at longer distances than the most common iterations of RFID — 50 meters compared to 15 feet for passive RFID — and the tags store much more information than standard tags. “The most common tags store about 100 or 200 bits of information and we store 60 thousand bits, so instead of being limited to a serial number only, you can store a database,” Bravman said. Bravman is the former CEO of Symbol Technologies, a firm which makes bar code scanners, mobile computers, and RFID networking devices. Symbol was acquired by Motorola in September 2006 for $3.9 billion. Motorola announced that it will work with Intelleflex to develop new products based on the combination of Symbol’s and Intelleflex’s technical specialties.

The investment puts the 50-employee Intelleflex’s total funding at $42.3 million.