The round brings total funding in Santa Clara, Calif.-based Intelleflex to $42.3 million.

The deal includes participation from new investor Arcata Capital of Atlanta as well as returning investors Morgenthaler Ventures and Selby Venture Partners of Menlo Park, Calif., Woodside Fund of Redwood City, Calif., and Alloy Ventures of Palo Alto, Calif.

Intelleflex CEO Richard Bravman said he has been thinking of forging strategic ties to Schaumburg, Ill.-based Motorola since he joined Intelleflex in September 2005 and that the companies had been in serious discussions about an alliance for the last nine months.

In addition to its investment, Motorola will work closely to align the RFID division of its Enterprise Mobility business with Intelleflex to make each company's products interoperable, and Bravman said he expects the companies to market each other's products cooperatively under both brands.

Bravman came to Intelleflex from RFID developer Symbol Technologies Inc., a handheld laser RFID scanning device manufacturer that was a partner of Motorola as an independent company; Motorola bought it for $3.9 billion last January.

Bravman said he was originally attracted to the opportunity Intelleflex had in developing a new class of RFID technology between the extremely low-cost short-range passive RFID tags used in tracking individual retail items and active RFID tags, which require a continuous power supply and sell for around $25. Intelleflex's extended-capability RFID products are capable of containing vastly larger amounts of data than passive chips but have power supplies that only activate when needed. They sell for about $5.

The company's tags are designed to operate with a range of about 50 meters compared with passive RFID chips' range of about 10 feet. They are designed to be used in high-value asset tracking, with single users tracking their own products in yard management, supply chain and parts maintenance applications.

Intelleflex was founded in 2003 and raised $11.3 million from Selby, Woodside and Alloy in August 2004 to develop its original technology platform, then raised $15.5 million in July 2006 to launch production. The company announced its first customer win in 2006, with Chicago-based Boeing Co., which uses Intelleflex's tags to store repair history of frequently serviced parts of its 787 aircraft, and launched commercial sales in March 2007.

Intelleflex sells chips and the packaging that goes into tags used to mark assets as well as the readers that are used in tracking them. Bravman said the company's products are standards-based and capable of working with readers manufactured by others, including Motorola, but the companies will work together to extend the capabilities of each other's products in interoperable applications.

Reese Schroeder, a managing director with Motorola Ventures, said the company had an interest in extending its capabilities in RFID, particularly after acquiring Symbol.

"Intelleflex has been on our radar for a couple of years, and once Symbol became part of our family it made it more of a natural fit," Schroeder said. "Intelleflex's technology represents a new breed of RFID solutions that focus on extended capability in applications, and Motorola Ventures believes that, given the growing variety of business challenges that RFID can help address, these solutions show a clear path to a return on investment."

Bravman said the new investment will allow the company to expand production with contract manufacturers and extend sales and marketing, which primarily is done with channel partners in the applications development and systems integration sectors. He said it is likely Intelleflex will raise one more private round of investment in late 2008 or 2009 before reaching profitability.

Bravman said the company used no outside financial adviser for the round. It had legal work on the deal from Robert Dellenbach of Fenwick & West LLP in Foster City, Calif.