The Longmont, Colorado-based company says its initial product will hold 300GB of data with a transfer rate of 20MB/s. This will be the first of a generation of products that it hopes will scale up to 1.6TB and 120 MB/s transfer rates.

Equally, Inphase has an eye on mass consumer markets and aims to produce re-writable discs and products for use in handheld devices.

Three-dimensional storage, where huge amounts of data can be packed into a small space, has been a Holy Grail for the industry and the ability of polymer molecules to record an electrical charge has led a flood of companies attempting to bring the technology to market.

Most recently, Intel burned its fingers when it teamed up with Swedish developer Thin Film Electronics develop a rival to flash memory but the effort failed when it reached the pre-production stage.

What gives more credence to Inphase’s efforts is that the Bell Labs spin-off has already demonstrated a prototype of its drive. Moreover,in its latest round of funding, Bayer MaterialScience, part of the Leverkusen, Germany chemical giant, invested $5m in the company as part of an agreement to supply of polymer raw materials that will be used in the production of holographic storage media.

The Bayer investment was part of a $32.1m third round of funding that Inphase says it will use to complete the commercialization of what it claims will be the world’s first holographic data storage drive and media. The company only closed its $15m second round of funding in March.

Bayer MaterialScience aims to work with Inphase to develop polymers for the production of discs with a capacity of up to 1.6TB, enough to store the content of four million books on a single disk. We feel that this application will open up a very promising market for our raw materials, said Joachim Wolff, head of the Coatings, Adhesives, Sealants Business Unit at Bayer MaterialScience.

A great deal can happen in the next 18 months. IBM is working on the technology but was unable to return our call on a likely launch date at the time of wiring.

Inphase’s initial target markets are areas such as professional video, rich media, regulatory compliance and archive applications that require high capacity and long archival life. The company claims that data on its media will last at least 50 years and it says it can store 200GB per square inch.

Other investors in the latest round are Nanotech Partners, funded by Mitsubishi, New Venture Partners, Hitachi Maxell, ALPS Information Technology Fund, Yasuda Enterprise Development and Japan Asia Investment.

Storage media manufacturer Imation is already an investor in the company after backing it first funding round.