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Home > Nanotechnology Columns > Alan Shalleck-NanoClarity > Transiting The Nanotechnology Valley of Death NanoComp Technologies Inc. - A Model for the Industry

Alan Shalleck
President
NanoClarity LLC

Abstract:
For the last six years I've been advising nanotechnology companies how to transit the "Valley of Death" (VOD), the stage of a Nano venture when most of the nanoscience is completed and a jump over the VOD to a macro business has to be accomplished and financed. Most nanocompanies get stuck at the VOD and either stagnate or die. However, it is rewarding to find a Nano company, Like NanoComp Technologies Inc. (NTI) that is successfully transiting the VOD - driving to become sustainably profitable by making and selling Nano based stuff in the macro world. It can be a model for all of you who are stuck before or in the VOD or don't know how to start bridging the gap.

October 9th, 2012

Transiting The Nanotechnology Valley of Death NanoComp Technologies Inc. - A Model for the Industry

Transiting The Nanotechnology Valley of Death
NanoComp Technologies Inc. - A Model for the Industry
By
Alan B. Shalleck
October 2012

For the last six years I've been advising nanotechnology companies how to transit the "Valley of Death" (VOD), the stage of a Nano venture when most of the nanoscience is completed and a jump over the VOD to a macro business has to be accomplished and financed. Most nanocompanies get stuck at the VOD and either stagnate or die. However, it is rewarding to find a Nano company, Like NanoComp Technologies Inc. (NTI) that is successfully transiting the VOD - driving to become sustainably profitable by making and selling Nano based stuff in the macro world. It can be a model for all of you who are stuck before or in the VOD or don't know how to start bridging the gap.

Five specific steps should be mastered to make it across the VOD… and the last (not the first as most would imagine) is to obtain the financing to get across. The first four are strategic and if they are in place, financing comes easily. The first is to reach a milestone in the company's nanoscience R & D where the company has a unique nanotech prototype, product, or process from which it can build a scalable nanotech based product line. The second is to identify a large or growing market with demand and money for purchasing macro products that is susceptible to disruption by a nanotech enhanced product within the planned technology of the nanotech venture. The third is to understand the target industry processes - how currently raw materials and manufacturing are successfully used in building salable products so that any scale up of the venture's nanoscience prototype can fit naturally in that industry's structure without too much disruption. The fourth is to spend venture funds to modify its nanoscience prototypes to become substitutable feedstock for the identified industry's production methods. And fifth to find a series of financial institutions or large companies in or feeding that industry to finance or partner in scale-up thereby financing the company's product evolution into a macro size business .NTI seems to have met all the steps successfully.

Founded in 2004, NTI has spent the last 8 years building its technological edge and its tailored "long" carbon nanotube product line. Today, NTI is completing a $25,000,000 "C" round of financing having allied with DuPont as a customer, as a partner in scale-up processes and as a round C "participant." That's hitting a homerun. In addition, NTI has opened the first stage in a planned a 100, 000 square foot ‘headquarters and production' facility to make product for the contractual commitments it has obtained from DOD, NASA, and other well funded government agencies, and for the potential commercial business it expects to write. All carefully planned and staged. CTI's progress is impressive.

CTI's core technology is making long (mm in length -macro sized) carbon nanotubes. Carbon Nanotubes as most of you know are wonderful discoveries. CNT's have marvelous strength to weight ratios … 100 times stronger than the strongest steel and one six the weight. CNTs have amazing electrical conductivity… almost at superconductor levels. CNT's if configured correctly radiate electrons like a CRT and have photon absorbent characteristics akin to well-developed semi conductor solar cells. Last, CNT's have terrific thermal conductivity properties. Exciting? Of course. But not standard CNT's are not seriously commercial. CNT's are hard to use, are usually tangled, are of combined form (single wall and multiple wall), are very small and are expensive to make. Moreover, they are offered to the world mostly in powder form. A complete year's production of CNT's can fit in a single railroad boxcar. In other words, CNT's are not macro industry friendly.

NTI looked at the CNT markets and isolated the Aerospace Industry … aircraft manufacture, arms and rocket manufacture, space launch and satellite vehicles, military protection (armor and soldier protection, wiring for internal aircraft digital signaling and aerospace electrical conductive surfaces, as NTI's target industry for growth. Strength to weight was important in all these markets especially in aircraft and space vehicles. Aerospace was going digital requiring miles of wire (heavyweight cu or glass) everywhere on a plane or space vehicle. Reducing wiring weight was a challenging problem on all such products.

Upon examination of aerospace manufacturing practices it was clear that the aerospace industry wouldn't work with powders … it normally worked with tapes, sheets and wires. CNT at nanosize wouldn't sell in. NTI therefore concentrated on proprietary production technology to make CNT's in a form acceptable to prime contractors in aerospace and military with not too significant reduction in technical specifications. They successfully found ways to make CNT's long enough to be woven, to be inserted to strengthen materials, to be spun into wildly conducting wires, and to be pressed into non woven sheets for lightening and EMI protection, and for ballistic protective systems. These ‘long' CNT's could easily interface with existing aerospace and military production processes and machinery. It was a well-designed formula for commercial success.

With laser like focus, NTI built it's ‘long CNT" technology, patented it, and began to sell it into the prime contractors and at the same time, demonstrated how the strength to weight ratio of materials containing NTI's CNT's could change the ways in which build out occurred in many aerospace subsystems and components. Initially mm long CNT price has been high but the customers see cost as not the overall determinant. Reducing overall weight by 60 -70% changes how structures could be built and has collateral benefits through out the vehicle structure. For example, the cost of a CNT conductive cable for an inflight entertainment system was 4 times the current cabling cost…but a 60% weight reduction has NTI's wires in systems being designed into a number of new installations… and with volume from its new production facility, NTI believes that the cost within 2 years will be equivalent to the current per foot installed cabling cost.

Is NTI a finished success story? No, it is not. It clearly is not yet profitable and the entrepreneurial goal of sustainable profitability is a few years away. NTI has met all the five steps for crossing the VOD and, once its new sales force is in place, it should become a prime Nanotechnology success story.

I make no prediction as to exit strategy for the investors … but clearly an acquisition by DuPont is a possibility or an IPO when sustainable profits are generated … but not before. There is no pressure to exit. With its curve of progress, NTI should have no problem raising all the funds it needs now that it has moved beyond the VOD into macro production.

Alan B. Shalleck
NanoClarity LLC
www.nanoclarity.com


© 2012 NanoClarity LLC - all rights reserved.

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