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Impinj Secures $19m to Pursue Item-Level RFID

Semiconductor and RFID hardware manufacturer Impinj announced yesterday that it had raised $19 million in a private funding round, bringing total venture and strategic investment in the seven-year-old company to $98 million. The company will use the funds to pursue opportunities in item-level tagging.
Mar 08, 2007This article was originally published by RFID Update.

March 8, 2007—Semiconductor and RFID hardware manufacturer Impinj announced yesterday that it had raised $19 million in a fifth private funding round, bringing total venture and strategic investment in the seven-year-old company to $98 million. Led by AllianceBernstein, the oversubscribed round saw all previous Impinj investors returning to participate, among them venture firms ARCH Venture Partners, GF Private Equity Group, Madrona Venture Group, Mobius Venture Capital, and Polaris Venture Partners, and strategic investors Unilever Technology Ventures, UPS Strategic Enterprise Fund, VentureTech Alliance, and the Viterbi Group.

Impinj's last round of funding occurred in December 2005 (see Impinj Lands $26.5M in 4th Round of Funding). At the time, the company anticipated that the round would be its last. But due to the unforeseen acceleration in item-level tagging, it decided to seek another cash infusion to fund efforts to meet rapidly rising demand. "In 2005," explains VP of finance and administration Evan Fein, "we did not have the visibility into the item-level tagging market, particularly in pharma. The development of that market has been a pleasant surprise for us."

Item-level tagging in pharma, retail, and other sectors became a key strategic area for Impinj last year, whose earlier efforts focused more on serving the market for case- and pallet-level tagging. The company always expected item-level tagging to be a huge long-term opportunity, it just didn't expect the opportunity to take shape as quickly as it has. In the near term, Impinj will pursue case- and pallet-tagging as well as item-level. "We see ourselves as both an item-level and case- and pallet-level company," explains Fein. "The long-term market for item-level tagging is so much larger than for case- and pallet-level tagging. But we will maintain just as aggressive a stance in cases and pallets as with item-level tagging."

Aggressive indeed. Upon being first to market with chips that serve as the core electronic componentry in Gen2 RFID tags, Impinj enjoyed the role of sole supplier of these chips for the better part of a year. This meant that effectively all the Gen2 tags in circulation through much of 2006 were based on Impinj's chip, called Monza. Toward the end of the year, formidable competitors like Texas Instruments, STMicroelectronics, Philips, and Alien announced competing products. Since that time, Impinj has seen its market share reduced slightly, but it still holds between 85 and 95 percent, according to company estimates. "We're doing our darndest to protect that position," Fein says, adding that end users' appreciation for the company's high-quality product is a key defense. "As far as we know, we still have the best-performing Gen2 silicon chip." Additionally, Impinj struck long-term supply agreements with several strategic partners to ensure continued volume demand for Monza even after competing products hit the market.

At the last round of funding, Impinj announced some details about its financial position, specifically that the company expected to be profitable in the fourth quarter of 2005. Fein said the company no longer discloses such financial metrics but asserted that management is very pleased with its fundamentals. As evidence, he cited a recent award from the Fabless Semiconductor Association for outstanding financial performance.

As for an initial public offering, for which Impinj has historically been considered a likely candidate, Fein was slightly more circumspect than the company has been in the past, when it suggested that an IPO was a probable eventuality. "We take a very opportunistic approach to going public," he explains. "We would pursue it if it makes sense, but we will not divert our attention away from our core business."

Fein had a similar answer when asked about the company's plan to develop a Gen2 RFID reader chip like that announced earlier this week by Intel (see Intel Announces Gen2 RFID Reader Chip). "As a semiconductor company focused on RFID, we are probably better positioned than any other company in the world to develop an RFID reader chip," Fein says. "We definitely have a vision and plans for such a chip, but we don't have a specific timeline. Since we have a finite amount of resources, we want to leverage our opportunities. Item-level tagging is demanding our attention now, and appropriately so."
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