Mesh network technology company Zensys this week plans to announce it raised $16 million in its second round of funding.
The financing was led by new investor Bessemer Venture Partners, which was joined by existing partners Palamon Capital Partners and Danish growth fund Vaekstfonden. The company said it will use the cash to develop and market Z-Wave, an RF-based technology designed for residential uses including security, energy management and appliance control.
“We’re going to develop our third-generation ASIC (application-specific integrated circuit)” with the new capital, said Raoul Wijgergangs, Zensys’ vice president of business development. “We have the second-generation chip on the market right now, and we expect to have the third on the market in Q1 2006.”
Z-Wave has gained traction in the rapidly emerging market of “intelligent home control.” Motorola Inc., Honeywell Corp. and Danfoss are among more than 125 companies that have joined the “Z-Wave Alliance,” which markets the technology and ensures interoperability between Z-Wave systems and devices.
Last month, Intermatic, a manufacturer of energy control panels, began selling several different products featuring the technology in Fry’s Electronics outlets. The offerings are priced from $40 to $120, Wijgergangs said, and allow users to control remotely their home lighting, appliances and other electronic equipment.
Zensys’ offering competes directly against ZigBee, a mesh RF technology designed for home and industrial use. Z-Wave, a proprietary technology, has moved to market more quickly than ZigBee, an open standard that will give manufacturers greater flexibility. Like its competitor, ZigBee boasts an impressive list of backers, including Freescale Semiconductor Inc., Philips and Samsung. The alliance ratified the ZigBee specification in December and is working to bring the technology to market.
“We believe 2005 is going to be an incredible year of continued momentum and development for ZigBee,” Bob Heile, chairman of the ZigBee Alliance, said earlier this year. “With the ZigBee specification ratified, our focus is on ensuring interoperability through rigorous compliance testing and to facilitate global market adoption” of the technology.
A third home-control technology, X10, has been available for nearly three decades, but has failed to gain the mass-market adoption Z-Wave and ZigBee hope to achieve.
Eventually, such technologies could allow users to monitor home security cameras, unlock the front door and make sure the oven is turned off from a mobile phone. As cutting-edge technology continues to lower the price for such products-Z-Wave chips are about $2.50, a price that could be halved with the next-generation models-it seems a viable wireless home control market may finally be in sight.
Indeed, “eight or nine” manufacturers will be offering Z-Wave products by the fall, Wijgergangs said, through both contractors and retailers like The Home Depot and Lowe’s Home Improvement outlets. And investors are noticing, Wijgergangs said.
“The expansion of these product portfolios into a variety of channels is going to be the big thing happening for consumers over the next few months,” he said. “It is a very hot space … and the VC world recognizes that.”
