This story was originally published on July 25, 2007.

SkyeTek, a radio frequency identification company, said on Wednesday it snagged $10 million in third-round funding from two new investors. 

Westminster, Colorado-based SkyeTek makes RFID readers that can scan and collect data from tags attached to products. The startup has now taken $18.7 million in funding.

RFID has proven to be an attractive technology in areas such as automatic toll booths, shipment tracking, passports, and livestock tracking, but cost has been the technology’s biggest downside.

“RFID has proven to be prohibitively expensive, particularly for smaller firms,” said Allan Krans, an analyst with Technology Business Research. “The challenge has not been finding applications for RFID. It’s been finding a lower cost point for RFID.” (see IBM Pushes RFID Data Sharing)

SkyeTek said it tries to keep cost down with the use of less-expensive, off-the-shelf components for its readers.

 “We use inexpensive parts in our readers from industries such as the cell phone industry, where the parts have been drastically commoditized,” said Martin Payne, SkyeTek’s vice president of marketing.

The cost of the tag, a small object attached to the product that contains data about the product, has come down in price but the reader has remained relatively expensive.  Using the less-expensive readers would require people to put in play more readers in the application, but SkyeTek claims to have reduced the cost of the reader from about $2,000 to about $200. The company has also designed its products to use existing IP networks rather than a special RFID network.

“Anything that brings the benefits of RFID on the existing IP network will get attention, and my guess is that’s why SkyeTek got this funding,” said Chris Silva, an analyst with Forrester Research.

Maryland-based Grotech Capital Group led the round with participation from Washington, D.C.-based TD Fund.