ThingMagic Raises $9.5 Million

Jul 14, 2008ThingMagic, a privately held RFID reader supplier, has secured an additional $9.5 million in funding from its current investors. The money will be used to help the Cambridge, Mass., company continue on its strategic course to develop embedded RFID readers and fixed RFID interrogators designed for particular applications, and to collaborate with customers to build custom RFID solutions.

Founded in 2000, ThingMagic was an early player in the passive EPC UHF RFID market. Its initial work centered on RFID interrogators for supply chain applications that were being spurred by RFID initiatives at Wal-Mart, the U.S. Department of Defense and others.

ThingMagic operated for five years without outside investments. In 2005 and 2006, the company's first round of funding brought it a total of about $21 million, provided by several investment-management and private equity firms, as well as networking giant Cisco (see Cisco Backs ThingMagic).

The $9.5 million in new funding, announced today, comes from existing investors, including Tudor Ventures, The Exxel Group, Morningside Technology Ventures and 406 Ventures.

According to Tom Grant, ThingMagic's chairman and CEO, the company began embarking on a new strategic direction more than a year ago with the introduction of its embedded Mercury M5e and subsequent M5e-Compact readers. First introduced in March 2008, the Mercury M5e is optimized for EPC Gen 2 tags and employs the RFID Transceiver R1000 chip developed by Intel and now made by Impinj (see Impinj Acquires Intel's UHF RFID Reader Chip Operation).

The R1000 integrates a number of components into a single integrated RFID circuit, enabling digital signal processing and analog data processing on the same chip. The M5e-Compact is designed for mobile, portable and handheld RFID applications; compared with the M5e, it consumes one-third the power and is half the size (56 by 36 by 5 millimeters).

"When you develop a reader that is smaller, like the M5e-Compact," Grant says, "you can begin to deploy it in a variety of new places. That turned out to be a very intelligent move on our part, and enormously expanded our customer list." What's more, he adds, both the M5e and M5e-Compact, by design, combine multi-region capability into a single module, making it easier to deploy regulation-compliant products in North America, South America, Europe, South Korea, Japan and China.

An additional advantage of the M5e and M5e-Compact, Grant notes, is that ThingMagic was able to cost-effectively manufacture both modules in the United States, "because there is less labor involved in producing these embedded readers. That has provided economic benefits to us; we have a lot better efficiencies and control of manufacturing processes." Along with the two new modules as part of its embedded reader portfolio, ThingMagic also began offering developer kits intended to help companies evaluate and design interrogators geared specifically for their environments and business needs.

ThingMagic also began working closely with several companies to develop custom RFID solutions. "A good example of that," Grant says, "is the work we've done over the last year with Ford Motor Co. in the creation of the smart vehicle, or smart truck." Last year, ThingMagic began working with Ford and toolmaker DeWalt on Tool Link, an asset-tracking RFID application being offered as a feature on Ford's 2009 F-Series pickup trucks and E-Series vans.

Unveiled this past February at the Chicago Auto Show, Tool Link includes a built-in EPC Gen 2 RFID interrogator on each truck, along with related software, for tracking tools, equipment and other assets used in the construction industry (see Ford Thinks It Has the Right Tool for the Job: RFID).

According to Grant, ThingMagic is currently working on additional RFID solutions with other companies, though he says he cannot disclose details at this time. "Our confidence is pretty high," he states, "and we are going places with this technology which we can't yet talk about. Ford is a good case-in-point of the innovative ways RFID can be used. We're exploring uses of this technology that are pretty clever."

The $9.5 million will help to further that exploration, Grant says, and enable ThingMagic to continue on its strategic path. "This money is in no way an attempt to cover past sins," he states. "It is in having understood the pace of the market and digging in and figuring out a company strategy that is consistent, and that will give us a competitive advantage going forward."

The RFID market—which, a few years back, Grant says, appeared to take off like a "rocket ship"—has slowed its pace, but not its power. "The real hard, gut-wrenching work occurred over a year ago, and having gone through that—and everyone had to—we've come through it. We are now in for the long haul."