Dec 12, 2007This article was originally published by RFID Update.
December 12, 2007—No, you still can't buy stock in a pure-play, public-traded RFID company, because there aren't any. However, the last 18 months has shown there are plenty of opportunities to invest in RFID -- if you're a venture capitalist. Over the last year and a half, RFID and RTLS companies have received more than $433 million in funding from venture capital and private equity investors, according to an analysis of public records by RFID Update. RTLS and active RFID firms attracted the most funding -- an estimated $165.2 million in 13 identified deals -- which gives an indication of where early-stage investors think the best growth prospects are within the sector.
RFID Update found 28 private investments in companies that provide RFID and RTLS equipment or software (see chart below). Information was compiled from company announcements and published news reports. Mergers and acquisitions were not included, and no initial public offerings (IPOs) were identified.
Investments ranged from $180,000 for a reader manufacturer in India to the $75 million received by Precision Dynamics from a healthcare investment fund (see the announcement). The average investment was $16.1 million ($13.8 million excluding the Precision Dynamics deal, which was about twice as much as the next-largest investment). Most deals were between $10 and $25 million, and there were ten at $10 million or less. INSIDE Contactless and IDENTEC Solutions were listed twice because they each made two separate funding announcements during the period. Only three deals exceeded $25 million: Precision Dynamics', the $38 million near field communication (NFC) technology developer INSIDE Contactless announced this week, and the $33 million Alien Technology announced from a mix of new and existing investors.
Private Investments in RFID/RTLS, June 2006 - December 2007
|Amount (US millions)||Company||Product Category|
|$33||Alien Technology||Tags & Readers|
|$25||Time Domain||RTLS (UWB)|
|$19||Impinj||Tags & Readers|
|$14||G2 Microsystems||RTLS (WiFi)|
|$6.2||Thin Battery Technologies||Batteries|
|$4.5||PINC Solutions||RTLS (WiFi)|
|$0.18||Rapid Radio Solutions||Readers|
Notes about the chart:
- Total funding: $433.6 million + undisclosed investment in Fluensee.
- IDENTEC made separate funding announcements in June and November of 2006. The company did not make clear whether the November total included previously-committed funds. INSIDE Contactless made separate announcements in September 2006 and December 2007.
- Investments made in non-US currencies were converted to US dollars using the exchange rate at the time.
- Categories are imprecise. Some companies provide products or services in several categories. Categories used here represent what RFID Update believes represent a company's primary focus or the bulk of its business.
The table shows the confidence investors have in asset tracking-oriented technology, notably RTLS and active RFID. In fact, the investment raised by WiFi RTLS providers ($61.5 million) exceeds the projected total sales of the technology for the whole of 2007, which ABI Research forecast at $57 million (see Analyst: Strong Growth Ahead for WiFi-based RTLS).
IDTechEx expects active RFID technology to more than double its share of the market in the next 10 years. The firm estimates that active RFID accounts for 12.7 percent of the 2007 global RFID market, which it values at $4.96 billion (see Active RFID's Growing Role in Overall Market).
Because mergers and acquisitions were not included, the $165.2 million invested in active RFID and RTLS providers does not include the $126 million Zebra Technologies paid in January to acquire RTLS provider WhereNet, which also represents a significant investment and show of confidence in the segment. The purchase price was about 3.5 times WhereNet's prior-year revenues (see Zebra Acquires Active RFID Provider WhereNet).
These investment trends and forecasts show active RFID and RTLS are displacing EPCglobal Gen2 and other passive UHF technology as "the next big thing" in many eyes. The second part of this series will examine the level of investment in UHF-oriented providers, as well as identify other interesting investment developments.