With New $9.5 Million Funding Round, ThingMagic Gets a Fix on Smaller RFID Readers
The RFID business is getting hot again. A few weeks ago, Waltham, MA-based RFID software maker OATSystems was gobbled up by New Jersey’s Checkpoint Systems, and last week Greg reported that Seattle-based Impinj had sold off its memory business and bought Intel’s RFID division. Now Cambridge, MA-based ThingMagic, an MIT spinoff that makes hardware for reading RFID (radio frequency identification) tags, says that it has closed a $9.5 million Series B funding round.
On top of an $18.5 million pot raised in early 2006, the new round brings the company’s total financing to more than $28 million. Existing investors Tudor Ventures, The Exxel Group, Morningside Technology Ventures, and .406 Ventures ponied up for the round.
Founded in 2000 by a group of MIT Media Lab physicists, ThingMagic has just under 40 employees working from offices at One Broadway in Cambridge and a laboratory space in Woburn, MA. The new funding round coincides with what CEO Tom Grant calls a “fundamental shift” in the company’s product strategy. While the first round of venture funding was used mainly to ramp up manufacturing of large, fixed RFID readers used mainly in locations such as warehouse dock doors—where they detect RFID-tagged packages or products as they move past—Grant says the company has recently settled into a new focus on smaller RFID readers that can be embedded inside a variety of other devices.
ThingMagic worked with Ford Motor Company and toolmaker DeWalt, for example, to put its credit-card-sized M5e reader into the truck beds of specially equipped Ford F150 trucks, where they scan to make sure that all of a carpenter or construction worker’s RFID-tagged tools are present and accounted for at the beginning and end of a work day. And Lexmark has put the M5e into its T640rn laser printer, where it can program RFID tags embedded in paper documents as they pass through the printer.
The smaller readers (some of which are manufactured by Impinj) have a “form factor that encourages broader use of RFID as an enabling technology,” says Grant. ThingMagic still manufactures its larger (pizza-box-sized) readers for stationary applications, mainly in supply chain management. And all of the company’s products use the same fundamental operating system, called Mercury. But putting the system into a package as small and flexible as the M5e means that “we can now do two things as a company,” says Grant. “We can create a broad base of OEM [original equipment manufacturer] clients who base their own products on our hardware and software. And at the same time we can take on fairly difficult projects like the Ford experience, where we are hired to design a new functionality into an existing product. That’s led to an enormous improvement in our fundamental economics as a company.”
Grant says ThingMagic will use the new funding round to continue developing new applications for the M5e line, to move on to the next products on the company’s roadmap, and to expand its sales and marketing efforts into new regions. “We’ve seen enormous growth in demand for our products outside of North America,” Grant says. “But being able to set up the partnerships needed to pursue that—it’s good to have the funding to do that.”