Motia lands Prism Ventures, Intel

June 22, 2004
The Daily Deal, June 21, 2004 by Clifford Carlsen
Wireless chipmaker Motia Inc. has raised $12 million in a third round, including money from Intel Corp.’s venture capital arm, to bring initial products into high volume production for the Wi-Fi market and to develop additional product lines for a wide range of wireless applications.

Westwood, Mass.-based Prism Ventures led the new investment round alongside a strategic investment from the Intel Communications Fund arm of the Santa Clara, Calif.-based chip giant. Previous investors including Axiom Venture Partners of Hartford, Conn., Carrot Capital of New York and Kodiak Venture Partners of Waltham, Mass., also participated in the round.

Stamford, Conn.-based Motia said the new round of funding came at an increased valuation to its $5 million round of April 2002, which was led by Kodiak. Motia chief financial officer Rudy Morin would not disclose a valuation for the round, but said the company has gained an increase in each stage of investment since its $2 million seed funding from Carrot Capital LLC of New York in late 2001.

The company did not use a placement agent for its latest round, and called on Paul Hughes and Jane Harrison of the New Haven, Conn., office of law firm Wiggin & Dana LLP.

Motia raised the latest round as it prepares to begin volume manufacturing of chips that enable wireless networks to extend range without excessive power usage.

The company has already landed Schaumburg, Ill.-based Motorola Corp. and Hawking Technologies Inc. of Irvine, Calif., as customers for chips to go in new wireless network equipment products.

Morin said volume production will begin in the fourth quarter. Motia is using Maxim Integrated Products Inc. of Sunnyvale, Calif., as its contract manufacturer. Morin added that the Intel investment culminates a three-year operating relationship with the semiconductor leader.

Scott Richardson, general manager of Intel’s Broadband Wireless Division, said smart antenna technology such as Motia’s could play an important role in lowering service providers’ costs for last-mile wireless broadband delivery using the WiMax format. It can eliminate the need for customization by new customers.

Still, Morin said the fundraising climate was difficult because investors have begun to have doubts about the extent of Wi-Fi adoption. But he said Motia’s ability to demonstrate design wins with major customers eased the process.

“It started out tough, and we were having to knock on a lot of doors,” Morin said. “People really want to make sure there are milestones, and that you really have the chip and have customers, so once we had the endorsement of Motorola, it got easier.”

Morin said the company began raising money around September 2003 as it emerged from stealth mode with an engineering prototype of its first chip products. The company’s initial product is designed to boost the efficiency of wireless transmission devices by increasing range, but Morin said the chips could also be incorporated into wireless reception devices.

Bob Fleming, a general partner with Prism Ventures, said he was attracted to the investment by Motia’s “smart antenna” approach, which combines different antennae on a single chip to increase range.

Prism has invested in several wireless companies, including RF MicroDevices of Greensboro, N.C.

Fleming said Motia’s technology extends existing WiFi technology and has the potential to improve other areas of wireless communication including satellite radio and television.

“We thought they had some very unique and very cost-effective technology to solve the problem of how you get more range without using a lot of power,” Fleming said. “Motia’s technology and unique market positioning will enable the company to be an important smart antenna IC player across the wireless spectrum.”

Morin said Motorola will incorporate Motia’s chips into existing wireless transmission equipment. He added that Hawking will put the products in new stand-alone equipment designed to extend the range of existing wireless transmission networks.