RFID : You can’t hurry Love and you can’t hurry Technology!

You can’t hurry love and you can’t hurry technology! 2004 saw the predictions of how RFID was going to invade each and every corner of the supply chain.

Lets forget about the predictions of RFID chip on every toothpaste that a consumer buys, we knew that it was going to take a while before RFID reached the consumer level, there were cost concerns and privacy concerns, but generally the technologists told us that the RFID will revolutionize the supply chain. Walmart decided to take charge of the technology and show all of the other retailers on how it has to be done.

Last year there were a lot of grumblings from suppliers complaining that they were putting in all the investments and retailers were the one befitting from it. And that implementation of RFID was turning out to be more expensive and labor intensive than they thought it would be. Consultants complained that they were “under utilized” and RFID tag and reader manufacturer Alien Technology’s failed IPO didn’t help the matter much!

Now even the Walmart project is falling far short of the predictions: the Walmart’s savings have been practically non existent, suppliers have not only not seen any labor savings but have actually seen their cost rise and of course the RFID industry is so fragmented to provide real guidance. Not just Walmart but the Pharma and DoD appeared to have slowed down too. Dan Gilbert of SupplyChainDigest noted that:

I’ve heard several private reports that Wal-Mart is telling some people that for right now, they are going to sort of settle down for awhile, and try to better understand what to really do with the data and where the value prop really is for everyone.

The problem is the mismatch between the allocation of expenditure of infrastructure cost and the benefits realized. The group that has to expend resources on implementing it (manufacturer, suppliers) do not fully participate in the savings and gains that will be realized from implementing it.

Walmart asked its suppliers to include RFID tags; suppliers got ready but the manufacturers are lagging, so now the supplier has to pay for the tags, and also pay for the labor of affixing the tags, in addition to bearing the infrastructure cost of RFID readers etc. No cost savings for the suppliers.

Unless you are willing to allocate proportionate costs and benefits to each participant in the supply chain, the only way the technology will take hold is if it independently makes sense to implement it for each participant. And with RFID we are not there yet!

Personally, I have my doubts about quick RFID implementation, not because I don’t believe in the technology - it is remarkable for sure, but because I am not convinced that RFID is something that you can add-on to an existing physical structure that easily. Anybody who has installed WiFi system at home, knows that the signal is not uniform everywhere. Now consider RFID, which is on some ways a weaker signal then WiFi signal and the issues related to making sure that the all of the physical space of the warehouse in RFID device friendly! Others have commented on this issue in great detail. Add interferences, hardware and software issues, unresolved patnet issues and what you get is a system that you might not feel comfortable fully relying on for inventory/asset control.

When the technology needs to be implemented across the whole chain, be it the supply chain or the retail chain, it is just difficult to rush through; it takes time! The current RFID piecemeal approach is bound to be slow and excruciating.

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Angel Investing: some tid bits! (Part 1 of 4)

I thought it might be interesting to recognize the size, scope, reach and the importance of the angel investors. (This is part 1 of 4).

If you have ever picked up a phone and called someone, you need to thank an angel investor for making that phone call possible.

In 1874, a young Alexander Graham Bell was searching for money for this strange gizmo that would transmit voice over wires. Most investors adopted the prevailing opinion, as summarized in an editorial in the Boston Post, “well-informed people know it is impossible to transmit the voice over wires and that were it possible to do so, the thing would be of no practical value.�? Bell did not have huge personal resources or a company with any tangible assets to provide collateral.

Angel investors Green Hubbard and Thomas Sanders of Salem, Mass., put up the equity capital to start the Bell Telephone Company of Boston. They took a chance on upcoming, promising but unproven technology; the exact same thing that most angel investor do today.

In the United States angels invest more dollars in more companies than the formal, or institutional, venture capital market. They are the largest source of seed and start-up capital for entrepreneurs.

Jeffrey E. Sohl, is Director of the Center for Venture Research at the Whittemore School of Business and Economics at the University of New Hampshire, has gathered some interesting stats.

In 2005, in the United States, angels invested $23.1 billion in 49,500 ventures or approximately $470,000 per deal.

In contrast, during this same period venture capital funds invested $22.1 billion in 3,008 deals, for an average of $7.4 million per deal.

In the seed and start-up stage, the difference between angels and venture capitalists is even more stark. Close to 55 percent of angel deals in 2005 were in the seed and start-up stage, while venture capitalists allocated a mere 6 percent of the deals to these stages. Even during the best of times venture capitalists, over the last decade, have never invested more than 15 percent of the deals in the seed and start-up stage. In fact, in 2003, the VC group invested a mere 2% in the seed and startup companies.

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Sendio: Spam fighter gets $4M in series A : Lifetime to become an overnight success

Sendio has one of the aggressive spam fighting system. It’s product, the I.C.E. Box performs Sender Address Verification (SAV). SAV is different than filtering because it is not content-based: Messages are not read or scanned, and no guesses are made as to proper content. Every message is checked to evaluate whether or not the purported sender of the message has been added to the recipient’s Accept List.

Little too aggressive and inconvenient to the sender for my taste but I guess everything is fair in love and war and no war has been fought with more vigor then the spam war.

Sendio received $4M round A funding from Momentum Venture Management. previously it had received bridge funding from TechHarvest.

However, that’s not the story; Sendio has a few large customers and it was expected that it will secure financing. Investor’s Daily had an interesting article about them a few days ago and the background story is illustrative of very many startups.

For more than three years, Tal Golan tried to persuade venture capital and angel investors to invest in his startup company. He struck out each time.

Golan had been developing a spam filtering technology since 1996, when spam was just a blip on most computer terminals. By 2002 Golan decided his technology was ready for commercial production and founded Sendio, in Irvine, Calif.

He needed funding for marketing and production to make it big. But investors turned him away mainly because Golan lacked management experience.

And for a good reason too; ideas are dime a dozen: its the execution that counts. Also, this was 2002, the bar was a bit higher then.

Working out of a bedroom, then a garage, and then a one-room office suite, Golan tapped his credit cards and took out a home equity loan to cover his costs. He got the customers the investors asked for. But he still couldn’t get the money.

He got the customers but he was still missing the “management” that is critical in getting from the product phase to a venture phase.

Many startups are finding that traditional routes to raising money are closed. Venture capital investment firms won’t write checks for companies without solid track records. Angel investors — typically a collection of wealthy people who provide startups with capital for ownership equity — used to step in where VCs would fear to tread. But they’re acting more like venture capital firms, wanting higher qualifications than times past.

It is true that the angel investors are looking for higher qualifications, but that’s not necessarily a bad thing. Earlier one has all the ingredients gathered, better the souffle will be.

What Golan really needed — and what he finally found — was a venture management firm. They are early stage advisers who often become interim executives to help young firms get business traction. Venture managers know how to structure a company, attract key partners, customers and capital.

The tipping point for Sendio was finding such a firm, Momentum Venture Management, in Los Angeles. Managing directors Matt Ridenour and Andy Wilson first did an extensive, thorough review of Sendio and agreed to help.

Golan agreed to hand his chief executive title over to Ridenour.

Having been on all three sides of the table (as a startup looking for funding, as an investor evaluating the company and as an attorney putting the deal together) I am not sure whether to fully endorse this route either.

Often, founders won’t let go of senior management titles. The company was their idea; they’ve invested 18-hour days over a period of years and bet the farm on a dream. It’s hard to admit they just don’t have what it takes to go all the way. Not getting folks like this to step aside — when it’s necessary — is a reason many startups fail.

This is a myth, especially for companies that are seeking round A financing like Sendio was at this point. There are several transition points where it is appropriate for founders to cede the management but I have also seen way too many situations where the company was taken away from the founders a little too early, making the passion and “the force” disappear.

“It can be hard to give up control, but for me it was the right thing to do,” said Golan, the firm’s president and chief technology officer. “One of the reasons Sendio could not raise money was me.”

That is exactly the point; most of the founders recognize when they are out of their depth.

Sendio has gone beyond the most difficult stage for a startup — getting the first round of funding and the first few million dollars in sales. The investors who turned Golan away are now coming to him.

“It’s like the saying, ‘It takes a lifetime to become an overnight success,’” Golan said.

I couldn’t agree more! It does take a lifetime to become an overnight success.

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Axiom Microdevices: $25M in funding for the next generation of CMOS PA

axiom microdevices logoIrvine basedAxiom Microdevices , announced that it has received $25M in funding for development of fully integrated CMOS power amplifiers.

A long standing pain in the mobile devices market has been the need to deliver high power output while retaining linearity of the amplified signal, all the while keeping costs down in this highly competitive market. Axiom Microdevices attacks this segment with fully integrated, cost efficient power amplifiers, based upon a technology developed at California Institute of Technology.

Along with CMOS PAs, such as the ones designed at Axiom, recent power amplifiers designs have also been based upon Bipolar and BiCMOS.

A bit of history…… CMOS (complementary metal oxide semiconductor) - with its parent the venerable MOSFET (metal-oxide-semiconductor field-effect transistor) - is one of those solid technologies (literally) that just refuses to go away. The MOSFET (invented in 1933) and the CMOS (invented in 1963) have essentially stayed unchanged over the decades that they have been around, although major strides have been made in the areas of size reduction, power consumption and cost.

Irvine based Axiom received the funding in a $25M round led by Tallwood Venture Capital Axiom will be using the funding to ramp up production of its power amplifier devices. Each of the major existing investors, including U.S. Venture Partners, Anthem Venture Partners, VentureTech Alliance and Tallwood, increased their investment in the company.

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