Some estimate the impact of nanotechnology will top $1 trillion over the next 15 years. However this forecast unfolds, by any measure this is a great opportunity. For scientists, it promises new tools to foster collaborative research; for healthcare, it enables personalized medical solutions to chronic conditions such as diabetes; for all of us, it promises greater convenience (e.g. flexible television screens and wrinkle-free garments); for investors it offers the chance for tremendous returns. However, nanotechnology is reaching a critical point in its lifecycle – it must deliver on some of these promises or face a crisis of confidence. Investors and prospective customers are asking what the future holds for the hundreds of new nanotech startups – which of these will be successful?
Exciting discoveries are made daily, but there is no guarantee scientists will have access to key infrastructure to support commercialization. The development of nanotech-enabled products requires deep cross-disciplinary expertise. This presents challenges to traditional research and development, particularly within corporations, which are constantly feeling the pressure for immediate profits. Universities, on the other hand, are increasingly fueling new nanotech discoveries, but don't always have the expertise, charter, or assets to market them. The best and most promising technologies may never come to fruition.
Critical to ensuring discoveries fulfill their potential is striking a balance where corporations and governments can work closely with universities to drive and finance product development in a low-cost, low-risk way. This includes ensuring scientists have access to funding, research equipment, and support services such as counsel in areas essential to commercialization, including intellectual property law. We must create an environment where universities and corporations align their assets – intellectual capital, financial capital, and market knowledge – to ensure the most favorable outcome for these discoveries.
For nanotechnology to succeed, investors must adopt a new model that promotes the development of early-stage companies across a wide range of industries and geographies. This should focus on providing financial and equipment resources, human resources, and a network of commercialization and manufacturing partnerships. In short, nanotechnology needs new models that go beyond traditional venture capital to sensitive and reflexive financial support, supplemented by services that can ‘shepherd' technological development toward commercialization in a ‘participatory' rather than ‘passive' manner. More than any other technology advance in the last 50 years, nanotech research requires unique, highly accurate, and very costly equipment. Investing in equipment to extend resources of early-stage companies and academic labs is critical to supporting development. One way to avoid this cost is for investment to be shared by a portfolio of companies, diversifying risk and providing resources to a broad spectrum of researchers. For example, an electron-beam lithography system could be shared among a portfolio of partnership facilities, rather than duplicating existing infrastructure. Costs can be cut further via collaboration with academic institutes that have the equipment.
While executive and administrative support is critical to early-stage companies, it often siphons funds away from hiring researchers. Investors should provide the resources to hire new scientists, while assuming support functions for portfolio companies directly, until each can bring those functions in-house.
Investors should also support and promote growth of their nanotech portfolio companies through a network of academic, industry, and commercialization partners. Early-stage companies often don't have the relationships to bridge the gap between discovery and manufacturing. Investors need to:
• Extend and diversify academic partnerships, building deep alliances with premier universities that have leading centers of nanotechnology excellence;
• Seek industry partners with a common goal of funding and guiding early-stage nanotechnology companies;
• Seek licensees, purchasers, and joint-venture partners for portfolio technologies as they mature. Smart investors will leverage majority control of technologies to choose the most value-generating route for commercialization.
This investment model, though similar to the incubator popular with the technology community of the late 1990s, is more advanced and has precisely the resources needed by nanotech companies, which do not have strong existing infrastructure and are not widely understood by prospective customers, investors, or the public. They need much nurturing to develop early-stage ideas through to commercial success and often need help in educating key audiences. Marrying industrial support to academic research bridges this gap between innovation and the market, and provides the economic environment and infrastructure for innovative solutions to be developed.
[1] Magnus R. E. Gittins is president and chief executive officer of Advance Nanotech.