Alien Technology, a maker of tiny radio tags and readers, has a somewhat bumpy history. But now it’s back with a new round of $38 million in venture funding.
Back in 2006, without ever recording a profit and with losses exceeding sales, it filed for a scary IPO but was forced to pull it and then cut its worforce. It has burned through a whopping $302 million.
The new round is only slightly smaller than the $40 million it was seeking in the summer. It was led by existing investors Advanced Equities, New Enterprise Associates, Rho Ventures and Sunbridge Partners. The financing is well timed, closing just before the economic crisis, and suggests that the company has moved on from a hype cycle a few years ago to real products and revenues. (It also has a new CEO.) Its chips are being used in a wide range of technologies, from tracking evidence in crime labs to locating pallets of goods in massive warehouses.
“We raised the round quickly, but I’m glad we closed our round before Wall Street collapsed,” said chief executive George Everhart (pictured left).
The Morgan Hill, Calif.-based company makes radio-frequency identification (RFID) chip tags and readers that scan the data stored on those chips from dozens of feet away. Its claim to fame is “fluidic self-assembly,” a futuristic manufacturing method developed by UC Berkeley’s John S. Smith, who founded Alien in 1994.
Alien’s factories in Fargo, N.D, and San Jose have machines that take the tiny RFID chips and put them into a river of goo. The goo has chemicals that make the chips align themselves into little packages where they can be sealed and attached to a radio antenna. (If you don’t like my technical description of goo, there’s more information here. Basically, the chips flow through a river until they settle into little receptor slots on a piece of film. Then they’re sealed and tethered to an antenna).
The system is so efficient that it can package two million chips per hour, compared with 10,000 per hour with other packaging methods, according to Alien. Early on, this wasn’t an advantage because the volumes were too low.
Beyond making the tags, Alien also makes the high-value readers that can scan the data and send it off to software-tracking programs. Alien can thus be a vertical supplier of anything its customers need to implement an RFID tracking system. But the strategy exposes it to more competitors in each sub-sector of the RFID business. Read the rest of this entry »

