NanoMuscle Gets Pumped Up

Mini-motors maker NanoMuscle Inc. of Antioch, Calif., inked a $16 million Series C round last week that will stretch its production capacity to millions of units per month and allow the company to flex its strength among the toy makers and auto companies it counts as customers.

Investors in the deal include a mix of venture capitalists and strategic partners from the U.S., Europe and Asia. They include Vision Capital, Crossbow Ventures, FirstHand Capital, Capital Valley Ventures, NetPartners, Greyhound Fund, AFA Private Equity Fund, Schneider Electric and PacRim Ventures.

Additional investors include AutoVision GmbH, a wholly owned subsidiary of Volkswagen in Germany; DaimlerChrysler Capital Services, the automaker’s financial arm; and toy maker Jetta Ltd. of Hong Kong.

Investors in earlier rounds of funding include Silicom Ventures, Garage Technology Ventures, The Band of Angels, IDEO Ventures and The Keiretsu Angel Forum.

NanoMuscle, founded in 1998, makes paper clip-sized motors out of a nickel and titanium alloy that can rotate 60 degrees or move 4 millimeters along a straight line. They raise the eyelids of a doll called Baby Bright Eyes. There are 14 of them in a car’s air conditioning system, while another 86 of them in the car do things like adjust the rearview mirror and pull down the door locks.

“Mini-motors are a $12 billion market currently served by a 100-year old technology,” says NanoMuscle CEO Rod MacGregor. NanoMuscle is using nanotechnology to replace coils and magnet systems most often used to produce motion. NanoMuscle’s motors have the advantage of being smaller, faster and cheaper than the older coils and magnet systems.

With three rounds of funding behind it, the company has $40 million of venture capital and no immediate plans to raise more. This round of financing will be used to expand its sales and marketing teams in Hong Kong, where toy manufacturer Jetta is based, and in Germany, close to DaimlerChrysler’s production lines. Although the company is now focused exclusively on selling its motors to toy and car manufacturers, plans include a drive into the consumer electronics industry at some point in the future.

NanoMuscle currently has 40 employees, and expects to have enough revenue to support its operations and break even within 12 months.

The NanoMuscle deal is at least the third nanotechnology company in the last month to receive venture funding.

In September, Woburn, Mass.-based Nantero Inc. announced a $10.5 million Series B and Somerset, N.J. NanoOpto Inc. closed a $7 million Series B.

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