There is no doubt that emerging technologies in materials science have great potential for exciting new products and devices. So why does the world of start-up companies and the search for investment seem full of unknown danger, unpredictability, and failure? Alex Pasteur, an investment manager with the UK venture capital group Cambridge Gateway Fund, relishes the challenge and the excitement of emerging technologies. It becomes clear that he is exactly the person to ask which materials technologies will make it to market and explain the issues surrounding technology start-ups.

It may be Pasteur’s varied background that helps him manage the investment process of making a science breakthrough a commercial success. He has a blend of academic, consultancy, and management experience. Having completed a PhD in surface science from the University of Cambridge, he started working as a graduate trainee in a small consulting firm. Possibly his most useful experience was gained as head of business development at an Internet café chain. “I very much jumped on the Internet bandwagon,” says Pasteur, describing his two years at Internet Exchange as “fascinating”. “It was six months of a crazy bull market, then 18 months of the reverse. I learned more from the reverse.”

So as an investment manager, what does he actually do? “Basically, it means investing in technology companies that are typically loss-making but have potential for rapid growth,” he explains. “We are set up to funnel funds from international investors through our team into various investment opportunities.” This formal investment typically comes when a fledgling start-up is moving forward after an initial seed round. This could be money from friends, family, or a few angel investors. “We are looking for innovative technology, the core of a good team, and a very big commercial opportunity.” Pasteur admits that it is very hard to find all of those things, but Cambridge Gateway Fund will meet with companies to learn about their technology, find out what they are doing already, and hear their plans for the future. There is never a blinding insight about the potential success of projects and it takes time to make a clear decision to invest, he cautions. But Pasteur does accept the decision-making process can be smoother and quicker for the best opportunities, “The good ones tend to stand out.”

One area of materials science that may have outstanding potential is polymer electronics. “Polymer electronics is an area where the technology is very exciting, but it will take an awfully long time to commercialize.” Cheap electronics based on plastics hold an enormous commercial prize, moving towards pervasive computing, but the technological challenges are just as big. Pasteur lists the problems of charge carrier mobility, temperature sensitivity, and long-term durability. He also points out that there is currently no consensus on the best way to manufacture the circuitry, whether to use ink-jet printing, surface patterning, or a combination of the two. Taking the example of Cambridge Display Technology (CDT), which spent many years developing its light-emitting polymer displays, he expects more ambitious polymer electronics projects to take a similar length of time. “The CDT product is very interesting. It remains to be seen whether it will really make the splash within the screens industry that was once hoped. I very much hope it does. As with all these companies, only time will tell.”

Other opportunities, Pasteur believes, lie in process improvement, bioactive materials, specialist catalysts, and nanomaterials. “Nanomaterials is a real buzz word and I don’t like it. The nano lobby has done well because nano is a nice word and people understand ‘small’ as a technology. But it’s a lot of hype as well.” While Pasteur marvels at the power and beauty of the techniques used to manipulate matter on an atomic and molecular scale, he questions its potential for application. Giving the familiar example of IBM’s atomic corral, he says, “It’s of no use to anybody. How are you going to scale that up? Mass manufacture of that is impossible. It’s just an academic exercise that is fascinating. The scale-up issue is absolutely paramount.” Instead, he believes companies with less glamorous products will have the first commercial successes. ‘Top-down’ innovations in manufacturing will succeed rather than using a ‘bottom-up’ approach. “This has to be a real-world, macro, industrial-scale process that we’re going to use. So let’s just innovate the processes and see what we can get out of the other end that is on the nanoscale and of interest.” He is very interested by companies that are beginning to produce useful amounts of precisely defined nanometric powders. These do have real-world applications in cosmetics, sunscreens, paints, electronics, and coatings.

Starting a technology company is not easy, says Pasteur. “There’s nothing harder in the world than a start-up company. And a technology start-up is even harder than that. The odds are always stacked against you and there are always pitfalls and hurdles on the way.”

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DOI: 10.1016/S1369-7021(03)00157-3