RFID Startup Secures $6 Million

Startup TrueDemand Software Inc. launched this week, and announced $6 million in Series A funding to support the rollout of its Radio Frequency Identification (RFID) software later this year.

The company, which was founded last year, is backed by investors Mayfield and Bay Partners.

RFID has been much hyped as a tracking technology that's hardier, easier to implement, and more flexible than bar-code scanning. The technology is taking hold among retailers and manufacturers. Wal-Mart, for example, gave its top 100 suppliers a January 1st deadline for RFID compliance.

However, dealing with the vast amounts of data generated by tracking RFID-tagged items is easier said than done, with inventory movements potentially generating millions of transactions. Earlier this year, analyst firm IDC warned that the success of future RFID rollouts rests on the ability of enterprise networks to cope with the influx of data (see IDC: RFID Success Depends on Networks).

Eric Peters, the TrueDemand CEO, tells NDCF that the cash influx will go towards rolling out the companys first products, which will be launched in the fall. At this stage, Peters is keeping mum about specific details, but he claims TrueDemand’s software will sit on top of IBM Corp.’s (NYSE: IBM) WebSphere middleware and work with Oracle Corp. (Nasdaq: ORCL) SQL and IBM DB2 databases.Peters says TrueDemand will use “a fairly complex set of algorithims” to analyze data from RFID readers and other devices. This will then be used to predict sales patterns and identify situations when stock may run out, he adds.

The company is planning to tout its products around markets such as pharmaceuticals, consumer electronics, and the retail sector. Peters says the firm is currently working with a “handful” of beta customers, although he would not reveal their names.

The CEO was a little more forthcoming about TrueDemand’s partners, which include Intel Corp. (Nasdaq: INTC), VeriSign Inc. (Nasdaq: VRSN), and IBM. Peters says TrueDemand will look to sell its wares via these companies, rather than focusing on direct sales. ”It’s easier to leverage their resources than it is for us to recreate the wheel,” he says. “We do some direct sales, but as a small company we have got limited bandwidth.”

But, to a large extent, TrueDemand’s success rests on factors that are outside the startup’s control. For example, some observers warn that the long-term viability of RFID depends on the ability of chip manufacturers to keep the tagging technology’s price point down (see Middleware Players Eye RFID). Tellingly, however, RFID hardware vendor Alien Technology last week picked up a massive $66 million in funding, which suggests that there is plenty of momentum behind the technology.

TrueDemand was set up by Peters, a former executive vice president of strategy and business development at supply chain specialist Manhattan Associates Inc., and one-time SAP AG (NYSE/Frankfurt: SAP) director Raymond Blanchard, who is now TrueDemand’s vice president of business development. Jie Weng, formerly a SAP research scientist, also helped found the company and now serves as the startup’s director of product management.Based in Los Gatos, Calif., TrueDemand has 17 employees, although Peters says the company is looking to add “a couple more people” in sales and marketing.

— James Rogers, Site Editor, Next-Gen Data Center Forum