Alien Gets $38 Million in Funding

By Bob Violino

The company will use the money to create tags and readers for worldwide use and to expand its production capacity.


Aug. 8, 2003 – Alien Technology, the Morgan Hill, Calif., company that has pioneered a low-cost way of creating RFID tags, has received $38 million in new funding, bringing its total venture funding to $125 million. The company

Alien’s Prodromou

plans to use the money to expand its product line and its production capacity.

Alien currently produces RFID tags and readers based on the Auto-ID Center’s Class 1 specification. The hardware is optimized to work at 915 MHz, the UHF band used in North America. Alien is working on tags and readers that will perform under frequency and power output requirements in Europe and Asia.

The company is also investing in new microchip designs for its tags. “We always planned to increase the functionality and performance of the Class 1 chip,” says Alien CEO Stav Prodromou. “One of the first things we want to do is increase the data capacity from 96 bits to 128 bits. That will happen shortly.”

The company will use some of the money to expand its production capacity. Alien has developed a high-speed tag assembly process called Fluidic Self-Assembly. It already has a roll-to-roll machine that can produce a billion tags a year. But it is gearing up to meet future demand.

Last month, Alien announced plans to build a second production facility in the North Dakota State University Research and Technology Park. State and local grants will pay for about $35 million of the $40 to $50 million facility. Alien will cover the rest.

Alien CEO Stav Prodromou says the new facility, which will be phased in over time, will be able to produce 20 billion tags annually when fully operational. “We see demand building rapidly, but it will take several years to get to those kinds of numbers,” he says. “We want to make sure that we have adequate space and equipment to support the growth everyone expects for this industry.”

The latest round of funding was led by Advanced Equities and included Lago Ventures Fund, Forsythe Technology and H&S Ventures. Sixteen existing investors also participated in this round, including Sevin Rosen Funds, Rho Ventures, New Enterprise Associates, CMEA Ventures, First Analysis, Equitek, Digital Bandwidth and Dow Chemical.

One notable strategic investor is Manhattan Associates, a software company that offers warehouse management and supply chain execution applications. In June, Alien and Manhattan teamed up to offer “RFID in a Box,” a packaged aimed at helping companies to start using RFID technology quickly.

“They are very active in RFID and continue to put resources into it,” says Alien’s Prodromou. “We have tremendous cooperation going on at major customers with Manhattan Associates. The fact that they are an investor indicates their commitment to RFID and Alien as a partner.”

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