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Alan B. Shalleck
February 21, 2006
Investment opportunities in nanotechnology are being missed because of mischaracterization. Last week, in front of Congress, members of the Nano Business Alliance described nanotechnology as "Early Stage." "Early Stage" is too general. All nanotechnology today is not "Early Stage." Distinctions are needed. With proper distinctions, nanotechnology in 2006 becomes a multi-segmented rapidly growing arena with justifiable private investment sectors and IPO opportunities not to be missed.
"Early Stage" (although correct regarding molecular manufacturing) is a retarding phrase. It gives nanotech IPO underwriters and potential nanotech investors a postponable decision. I have often heard from smart people the following: "It is too soon to be investing in nanotech. It is still 'early stage'." That is a perception needing change. This "maybe in the future" approach is hurting the liquidity in the nanotech industry and creating the valley of death for many promising young nanocompanies. It is also freezing the public out of some of the most promising nanotech company opportunities.
I believe the correct description of nanotechnology today should be a positive "Getting There!" Because … we really are "Getting There." There is a growing list of at least "teenage" sectors of nanotech space. Like all teenagers, those nanotech "teenage" sectors will mature quickly and opportunity will be lost. How many commercial nanotech products are necessary before the investment professionals wake up and create nanotech investment vehicles for rest of us? The timing for public underwriting and investing in nanotechnology today couldn't be better. The IPO market is hot. The economy is strong. Money is available in large amounts. This is reality, not hype.
Lets look at the facts, and make clear distinctions between nanotechnology sectors. After six years of $1+ billion/year of domestic NNI federal government investment and, simultaneously, two - three times that investment by private and local governments (plus cherry picking VC investment) - all that nanotechnology investment is beginning to pay off … right on the NNI 5 - 10 year schedule. 2006 - 2007 are the years of nanoproduct commercial introductions. At last count, there were over 160 pure commercial nanotech domestic products being marketed with additional products being introduced monthly. Many more true nanoproducts are being sold internationally. Once a company introduces its products to the commercial markets it is hard to call that company "early stage."
Certainly, the manufacture of Carbon Nanotubes (in all forms) by multiple companies in tons (production quantities) can't be early stage. Certainly, the manufacture in tons of highly characterized zinc oxide and titanium dioxide nanoparticles for use and current sale in cosmetics and other health and beauty aid products can't be early stage. Certainly, the human clinical trials of multifunctional constructed nanoparticles for rifle shot treatment of cancer tumors under IND's is not early stage. Certainly, the use of CNT (up the value chain) in production large TV displays being marketed by major companies (Motorola, Samsung, Panasonic, etc.) next year in millions of units is not early stage. Certainly, the deployment of nanotech based sensors in detection systems in the desert in Iraq and in our vulnerable cities and towns is not early stage. Certainly, the millions of OLED displays on cell phones today is not early stage. Certainly, the new mini fuel cell nanoapplications for introduction in December of this year (some for use with cell phones) are not early stage. Certainly, the nanobased Li-Ion battery company in Watertown, MA that just raised $20 million to build production plants in China is not early stage. Certainly, the nano-instrument manufacturers are not early stage. The semi-conductor companies producing circuits with 65 nm lines are not early stage.
I could go on … but clearly there are nanosectors consisting of maturing companies that are producing and marketing true nanoproducts, and some sectors (like nanobased diagnostic arrays) that are on the verge of similar maturity. There will be at least 4 nanotechnology IPOs this year. Four times that number are ready to go public if they could find underwriters or valid SPAC's into which to merge.
VC's are not dopes. They normally have a five-year time horizon on their investments. They exit either publicly or by sale to others increasingly after five years to show their investors the promised returns. Selective VCs have been investing in cherry picked promising nanoventures now for five years and recently have followed up earlier investments with major millions to build "production" capabilities. "Production" is not "Early Stage." It is the "profit generating" stage." And, they are now beginning to take some of their investments public.
It is apparent to me that, because we are not describing ourselves correctly, the public leg of the new industry financing cycle is missing. The way we as an industry describe ourselves can go a long way toward re-balancing the financial pillars underlying nanotechnology companies.
I will be discussing the sector distinctions I see and what they represent in trends and opportunities in greater depth in my future columns.
©Copyright 2006 NanoClarity LLC
Alan B. Shalleck is the President of NanoClarity LLC (www.nanoclarity.com).
He can be reached at firstname.lastname@example.org
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