Wireless LAN chip designer Engim Inc. has scored a further $18.5 million of VC funding as the startup attempts to carve a name for itself in the multichannel chipset market (see Engim Pockets $18.5M).

This latest injection follows an initial round in September 2001 of $16 million, taking the total amount raised to $34.5 million. Benchmark Capital led today's round, joined by Adams Street Partners, Lazard Frères & Co. LLC, and previous investors Matrix Partners and Bessemer Venture Partners.

The company hopes the injection will further plans to differentiate itself from the mass of chipset startups in this crowded sector. In April Engim unveiled its EN-300 chipset supporting 802.11a (54-Mbit/s over 5GHz), 802.11b (11-Mbit/s over 2.4GHz), and 802.11g (54-Mbit/s over 2.4GHz), delivering bandwidth over multiple channels (see Engim Debuts WLAN Switch Chip).

This means that access points adorned with the chipsets could potentially deliver from 33-Mbit/s to 500-Mbit/s bandwidth -- far more than most access points available today.

The company’s VP of marketing, Scott Lindsay, claims to have eight access point vendors installing its chipsets at present. “We want to ramp this up, and it requires more resources to do so,” he tells Unstrung. “We will also be plowing investment into our faster, next-generation products that we hope to announce at the end of the year.”

Analysts are impressed with the startup’s progress thus far, playing down fears that its chipset will prove too costly for margin-sensitive equipment vendors (see What Price Perfection, Mate?).

“It is certainly going to be more costly than a standard access-point chipset, but they are going after a more niche technology,” comments Bob Wheeler, senior analyst at The Linley Group. “An access point based on Engim’s chipset could deliver clear benefits in large enterprise and outdoor hotspot deployments. Engim has a very differentiated and unique product from other startups in this arena. They don’t have the same problems as the likes of Synad Technologies.” (See Synad's Chipset Chitchat.)

Such differentiation could also see more established players snapping at Engim’s heels, says the Linley man. "Unlike most wireless-LAN chip startups, Engim offers technology that is complementary to client-oriented chipsets. This makes Engim an attractive acquisition target for major vendors such as Broadcom Corp. (Nasdaq: BRCM), Texas Instruments Inc. (NYSE: TXN), or even Intel Corp. (Nasdaq: INTC)."

Wheeler notes that Engim’s CEO, Nick Finamore, recently arrived from Intel’s network processor division, “so he is well connected.”

Today’s round of funding is not expected to be Engim’s last. “Semiconductor process technology is very expensive,” says Russ Craig, research director at Aberdeen Group Inc. “I would think at least one more round is required.”

Engim’s Lindsay is keeping an open mind. “Obviously we want to reach a point of revenue generation sooner rather than later, but we have to be realistic. We wouldn’t rule out another round.”

— Justin Springham, Senior Editor, Europe, Unstrung