Arcapita Ventures and Motorola Ventures on Thursday announced that they jointly made a $15.5 million investment in Intelleflex, a three-year-old RFID startup.
Venture investors' appetite for radio frequency identification has been fading over the past few years despite steady growth in investment across most other technology segments.
According to a recent report from the National Venture Capital Association, venture investment in RFID has nose-dived in the past three years.
The investment slide is occurring despite solid support for the technology from technology trendsetters such as the U.S. Department of Defense, Wal-Mart, and IBM.
Many in the industry believe the technology's progress has been slowed by the high cost of the main components, and VCs seem to be picking companies that have been able to drive down component prices.
"We've invested in the integration to bring all our functionality down to a single chip in the $5 to $10 range, rather than the $50 to $100 range like other similar forms of RFID," Intelleflex CEO Richard Bravman said.
In July SkyeTek, a Westminster, Colorado-based maker of RFID readers, got $10 million in funding. SkyeTek claims to have reduced the cost of readers from $2,000 to $200.(see SkyeTek Identifies $10M)
Intelleflex makes RFID tags and readers that operate at longer distances than the most common iterations of RFID—50 meters versus 15 feet for passive RFID—and the tags store much more information than standard tags.
"The most common tags store about 100 or 200 bits of information and we store 60 thousand bits, so instead of being limited to a serial number only, you can store a database," Mr. Bravman said.
Mr. Bravman is the former CEO of Symbol Technologies, a firm that makes bar code scanners, mobile computers, and RFID networking devices. Symbol was acquired by Motorola in September 2006 for $3.9 billion.
Motorola announced that it will work with Intelleflex to develop new products based on the combination of Symbol's and Intelleflex's technical specialties.
The investment puts the 50-employee, Santa Clara, California-based company's total funding at $42.3 million.