Funding at Ember Goes to $89M. Is That Good or Bad?

Ember, which specializes in ZigBee chips and other wireless networking devices, said it raised $8 million more today. Since 2001, it has raised $89 million.

Polaris Venture Partners, GrandBanks Capital, RRE Ventures, Vulcan Capital, DFJ ePlanet Ventures, New Atlantic Ventures, WestLB Mellon Asset Management (formerly West AM) and strategic partners such as Chevron Technology Ventures and Stata Venture Partners participated in the round. Earlier investors include STMicroelectronics, Hitachi and MIT.

On one hand, it’s an unvarnished positive. Who doesn’t like money? ZigBee and remote wireless networking has also taken longer to take off than anticipated. Back in the early part of the decade, ZigBee chips and chips on competing protocols were championed as remote sensors for “extroverted computing.” (Disclosure: That is a  meme I made up and tried to popularize. It flopped big time.) The devices could be used to monitor wildlife, or man security cameras in your home.

The public yawned.

Now, however, ZigBee has a reason to live: the smart meter and smart home. By putting ZigBee warts on energy-hungry appliances like dryers, homeowners can automatically, autonomically and easily control power consumption better. The market for 802.15.4/ZigBee devices is expected to reach as high as 292 million units in 2012, up from about 7 million units in 2007, according to research firm, In-Stat.

On the other hand, $89 million is a lot to sink into a company that makes what are rapidly becoming commodity chips that will also be produced by large, established manufacturers. Getting chip companies off the ground has become increasingly difficult during the decade because of the inherent costs of chip design and competition. Talk to VCs: most of them have veered away from chips. It’s just not fun anymore.

The total also gets close to that “magic” $100 million mark. It’s tough to quantify, but after a company raises $100 million, you begin to hear skepticism about it. Like, “what are they doing with that money?” Again, it’s tough to put your finger on, but Montalvo Systems, E-Ink, Alien, and other chip/hardware companies went from hot to not as they neared and passed that funding milestone.

Ember isn’t there yet, and it’s in a hot market, but these are all factors that should be taken into account.