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Impinj's History-Making IPO

The company is not the first pure-play RFID firm to be listed on a public stock exchange, but its successful initial public offering opens doors for other RFID businesses.
By Mark Roberti
Jul 25, 2016

Last week, Impinj, the Seattle-based manufacturer of passive ultrahigh-frequency (UHF) radio frequency identification chips for both tags and readers, held a successful initial public offering (IPO). The company sold 4.8 million shares for $14, raising just over $67 million. Though other RFID companies have been publicly traded, Impinj made history by being the first RFID company to hold a successful, high-profile IPO.

Shares during the first day of trading rose 28 percent, suggesting investors are bullish on RFID (and rightly so, in my view). Whether shares will go up or down during the next few weeks, the listing of a pure-play RFID company on the NASDAQ exchange is likely to help other RFID firms. First, the raising of $60 million, while modest by Silicon Valley standards, is not chump change. It legitimizes the technology in the eyes of investors, and it gives other venture capitalists another exit strategy. Previously, the only option for a VC-backed startup was to be acquired.

I think we will begin to see more venture capital coming into the RFID industry. As I mentioned in a recent column, RFID Journal is seeing more readers who are venture capitalists (see Investors Are Rediscovering RFID). It is becoming clear to smart investors that RFID technology is nearing the tipping point. We've seen more retailers adopting the technology. The volume of passive UHF RFID tags sold each year went from under a billion in 2010 to more than 5 billion in 2015, according to VDC Research.

The overall growth in the market so far has benefited mainly the larger players, such as Impinj, Avery Dennison, NXP Semiconductors, Smartrac Technologies and Zebra Technologies. That's because they are the best-known brands in the industry. As the market grows, there will likely be opportunities for other players to do well. Some might provide hardware that meets more specialized needs. Others might offer software or services to a particular industry. Today, these niches are too small to attract VC money, but that will change as the market expands more rapidly.

More VC money in the industry will help companies expand their research and development efforts, which will enable them to improve their products and do a better job of meeting potential customers' needs. Some of the money will also be used to market those products to businesses. That might not seem that significant, but it is.

One reason growth has been moderate in the RFID industry is that companies offering good solutions could not get capital since many VCs had been burned when RFID had failed to take off as fast as expected after Walmart announced that it was requiring suppliers to use the technology (see Wal-Mart Expands RFID Mandate and Wal-Mart Details RFID Requirement). That meant they had to bootstrap their efforts, and they often had little money left to market their products after putting a lot of cash into developing and producing them. As a result, companies that could have benefited from their products were unaware of them. Sometimes, these firms went out of business or were acquired before they could develop a market presence.

I don't expect Impinj's IPO to lead to a flood of VC money into the RFID industry, but I do think the company's success—and the fact that the market is growing—will attract smart investors who realize RFID is approaching the tipping point.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.

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