Wednesday, July 31, 2013
On Ramp Wireless: Connecting The Smart Grid
Story by Benjamin F. Kuo
In the world of mobile app and Internet startups, it's not that often that you see companies who touch the hardware side of the world get funding nowadays. One of the companies that has recently is On Ramp Wireless (www.onrampwireless.com), a San Diego company in the M2M market headed by Kevin Hell. The firm recently raised a $15M series C funding, and we caught up with Kevin to learn more about why its customers, and investors, are interested in its technology.
What does OnRamp Wireless do?
Kevin Hell: Essentially, we connect the internet of things. We have created a wireless technology and solution, end-to-end, that allows you to cost effectively connect devices that can be very, very remote. By way of example, our access point looks like a Wi-Fi router, but it has a coverage zone of 200 miles, depending on the obstructions that are in the way. That literally allows us to connect tens of thousands of devices at a very low cost. One of the big issues with the Internet of things, is it's largely an issue of connectivity at a reasonable cost point. We're looking to break that paradigm. We're already fully deployed with utilities like SDG&E, and we're working with other utilities, as well, on different apps. Our initial apps have been around distribution automation or distribution monitoring, such as monitoring distribution lines and figuring out when they go down, particularly in areas not covered by cellular or other wireless networks, and which are hard to reach. We also provide extremely long battery life. In addition, we're embedded into smart meters and wireless monitoring of meters, and in oil and gas pipeline monitoring with Enbridge. We have some tremendous headway in the oil and gas industry, in wellhead and pipeline monitoring, asset tracking, facilities monitoring, and more. It's really a broad set of applications. Our initial target is with utilities, with oil and gas next, and lots of other markets which are getting traction.
Is this a chipset, a system, modules, what's the range of technology involved?
Kevin Hell: We're going all the way down to the chip design and production, which is coming out of Asia. We have Renaissance making our chips. We're also doing modules, providing communications modules for SD&G and our other partners. We also operate the network software than runs and manages the entire network layer, from access point to end point. One unique advantage we have, is you can have a very diverse network, and lots of applications running off data from the same access point. In the case of the utilities, we have developed an entire application set that allows back end integration into a variety of their systems, and gives them a view of their distribution network and many aspects of monitoring of that utility, integrated with many back end systems for a variety of purposes.
Lots of vendors are looking at cell phone networks as being nearly ubiquitous. What's the gap in the market which would make your technology important to your customers?
Kevin Hell: That's a great question. I think there is clearly a role for cellular in M2M, for some applications. However, there are a lot of applications and assets for commercial and industrial customers where those assets are very remote. They're not currently in a cell phone coverage zone. In many cases, mobile cell operators have looked to build out specific networks to cover those gaps, but it comes at an extremely high cost, plus the base stations are extremely expensive. Yes, they can try to cover those hard to reach areas, but it's not very economical. The other big advantage we have is power draw and consumption. We can get fifteen year battery life on our devices, which is integrated with a GPS receiver. You can't do that with cellular technology. As you probably know, with your own mobile phone, those batteries don't last nearly as long. We're very power efficient, which is another big benefit. Our battery usage, ability to support remote areas is why customers want to use OnRamp vis-a-vis cellular.
Does your technology require you to own or license bandwidth?
Kevin Hell: We're actually using unlicensed spectrum, in the 2.4 Ghz range, in a very unique way. It's very resistant to interference, due to the way the technology was designed. We have a 172 decibel link budget, and are able to go long range, because our receiver sensitivity is very high. You can pick up our signal against background noise in the spectrum, and it's really resistant to interference from other wireless technology. For example, you can but this next to a WiFi router and you wouldn't see any interference from that.
This last round is a significant amount of capital, why the new funding?
Kevin Hell: Hardware companies do require more capital. I've been on the software side, and numbers here are much larger than software. That said, it's also a unique time to be a hardware company, as there are not as many others doing that. That means there's not as many competitors, which is an advantage for the company over the long term. The bottom line is, we're building an entirely new, wireless platform and technology, and to do that right, it takes quite a bit of capital. We're reducing the cost at the access point level and at the endpoint level, and continuing to invest to bring our cost points down. In addition, we'll be using those funds for sales and marketing, to go into new verticals and new markets, and to build our sales and marketing team. So far, we've put lots of investment into the engineering and technology side, and we're now shifting to sales and marketing.
It's rare to see a company in the hardware area get funding nowadays, versus those in software/Internet. Was it a challenge raising money in that kind of environment?
Kevin Hell: From my experience running EvoNexus, it's challenging to raise money for anybody right now, and particularly for early stage companies. For hardware, it's even more challenging. The capital risk is higher, and the payoff comes over the longer term. However, if you're successful, the payout is quite large, and there's a little bit less competition in the space. But, fundraising is always hard, and it's harder than it's been in a long time. That said, we have differentiated technology, 38 patents, of which 15 have been granted, a unique positoin, unique technology set, which really provides a huge advantage. We have a huge reference customer with SDG&E, and a world class partner with GE in the channel. We have smart meters at AMI, and another investor in Enbridge, in the oil and gas market. They're North America's largest transporter of natural gas and oil. This was a strategic funding, primarily, because we provided such strategic benefit to their business. In the venture capital world, there was certainly interest out there, but it's a bit more challenging for a hardware company for venture capital. Your valuation is lower than you would see with a strategic investor, and the strategic are in a unique position to understand the value you provide to their business directly.