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Item-Level RFID Firm TAGSYS Lands $35m

Item-level tagging specialist TAGSYS today made two major company announcements: the first that it received $35 million in financing, the second that it will relocate its headquarters from France to Cambridge, Massachusetts, in the United States.
May 23, 2006This article was originally published by RFID Update.

May 23, 2006—Item-level tagging specialist TAGSYS today made two major company announcements: the first that it received $35 million in financing, the second that it will relocate its headquarters from Huveaune, France, to Cambridge, Massachusetts, in the United States. RFID Update spoke with TAGSYS CEO Elie Simon about the news.

Simon said the funding will go toward three initiatives. The first is meeting the increased demand for item-level tagging from markets in which TAGSYS has historically participated, such as libraries, luxury goods, textile rental, as well as newer markets like baggage handling and postal and courier. While the traction is strong in these markets, it is actually pharmaceuticals that Simon identified as the company's most strategic opportunity. "We have our traditional markets which are still growing, and faster than expected, so that gives us some leg room" to support aggressive expansion into pharma-tracking. "Pharma is what we're betting the farm on," he said. A feather in the cap for the company's pharma leadership has been its work with Pfizer on the Vi*gra-tracking pilot (see Pfizer Shipping RFID-tagged Vi*gra).

The funding will also serve to strengthen TAGSYS' research and development, a goal for which the Cambridge relocation also played a part. Proximity to the area's intellectual capital in RFID was what distinguished Cambridge from other possibilities in the US. The Massachusetts Institute of Technology is located in Cambridge, where it hosts the US branch of the EPCglobal-partnered Auto-ID Labs, an organization devoted to research around RFID and wireless sensor networks. The local influence of EPCglobal will help TAGSYS focus on bolstering its offerings and intellectual property in UHF, the RFID frequency that is EPCglobal's historical domain.

Until recently, TAGSYS had been committed almost exclusively to HF RFID. That changed this year when the company introduced an item-level tag using Impinj's near-field UHF chip (see Tagsys Releases Gen2 Tags for Item Level). Simon emphasized that the company's entree into UHF does not signify a move away from HF. TAGSYS is first and foremost an item-level tagging company, he stressed, and it will seek to provide a portfolio of solutions -- HF or UHF -- to neutrally address all possible applications. "Our positioning here is that we are an item-level company," he said. "There are some applications for which UHF is good enough ... and there are some applications for which HF is the most appropriate." TAGSYS will aim to build expertise in all relevant technologies to help its customers decide which is best suited to their needs.

Lastly, the company intends to use the funds to build out its production capacity with the construction of a second plant in Chennai, India. Simon expects the plant to be open and operational by the end of September or early October, and it will bring TAGSYS' annual tag production capacity to 200 million.

When asked if any of the $35 million will be allocated to acquisitions, Simon explained that the company's focus is on organic growth and development. While TAGSYS is on the lookout for opportunities, "we won't be acquisitive for the sake of being acquisitive," he said.

JPMorgan Partners led the financing, a very sizeable one for the RFID space. Cazenove Private Equity, as well as existing TAGSYS investors Elliott Associates, L.P. and Endeavour also participated. TAGSYS last received financing in April 2005, in the amount of $12.2 million. The company has grown its employee base by 50% in 2006 alone, from 80 to 120 people.

Separately, the company earned a top-ten ranking in the 2006 RFID Marketing Strategies Report among RFID hardware providers in the "Most Recognized" and "Thought Leadership" categories. The rankings were based on a survey of more than 550 end-user and industry respondents.

Read the announcement from TAGSYS
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