Nanotechnology Now

Our NanoNews Digest Sponsors


Heifer International

Wikipedia Affiliate Button


DHgate

Home > Press > Nanotech Venture Capital is Out of Sync with Returns

Abstract:
Lux Research report finds nanomedical start-ups generate 77% of returns but get only 27% of investment.

Nanotech Venture Capital is Out of Sync with Returns

New York, NY | Posted on May 8th, 2008

Venture capital (VC) firms invested $702 million in nanotechnology start-ups last year across 61 deals, slightly down from $738 million across 73 deals in 2006. But this VC spending is sharply out of sync with investment returns. Although application-oriented life-sciences companies have delivered the majority of VC returns in nanotech, VC firms consistently devote most of their funding to companies in other areas, according to a new report from Lux Research entitled "How Venture Capitalists Are Misplaying Nanotech."

"Historical trends in nanotech exit returns are out of sync with VC spending," said Jacob Grose, Analyst at Lux Research and lead author of the report. "While alternative energy is hot right now, healthcare and life sciences companies have accounted for a staggering $1.68 billion of the $2.57 billion total valuation of nanotech start-ups at IPO. Correspondingly, revenue multiples at IPO have been an order of magnitude higher for the healthcare segment (206.2x on average) than in the four other segments we track, yet last year more nanotech VC deals closed in manufacturing and materials (16) than in healthcare and life sciences (15)."

To uncover the latest trends in nanotech VC, Lux Research took a snapshot of its ongoing, comprehensive database of the field, which contains every round of institutional VC funding in companies that are commercializing nanoscale structures with size-dependent properties. The report concludes that:

VC spending remains highly concentrated. The top 5% of venture-backed nanotech start-ups as measured by cumulative capital invested have received $1.24 billion since 1991, equal to 32% of cumulative VC funding through 2007. The top three: 1) optical equipment manufacturer, NeoPhotonics, at $205 million, 2) lithium-ion battery producer, A123Systems, at $133.8 million, and 3) drug developer, Acusphere, at $104.1 million.

In 2007, the energy and environment segment attracted the most nanotech venture capital, with 17 deals (up from 13 in 2006) worth a total of $227.2 million. Notable firms receiving funding included aforementioned battery specialist, A123Systems, with $70 million in two rounds, nanocrystalline solar ink developer, Innovalight, with a $28 million Series C, and organic photovoltaic developer, Konarka, with a $45 million Series F.

U.S. domination became even more pronounced in 2007, accounting for 90% of total VC activity by value. The tiny state of New Hampshire alone accounted for more funding in 2007 ($76.5 million in two companies, Finetex Technology and Nanocomp Technologies) than all countries outside the U.S. combined ($70 million).

· Many nanotech start-ups are showing their age. While VC firms have told Lux that they expect their nanotech VC deals to deliver returns in six years (longer than they expect in other investment domains), of the 66 nanotech start-ups which received their first institutional VC funding in 2001 or earlier, 58% continue to operate - implying that most nanotech start-ups are taking longer to exit than VCs had expected.

"Nanotech start-ups with technologies that are tailored to target one or two specific applications tend to be much more successful than companies who develop a broad technology platform with no clear purpose. However, the latter platform technology companies still generate valuable intellectual property," noted Jurron Bradley, Senior Analyst and head of Lux Research's nanomaterials practice. "Large corporations should roll up materials and platform technology companies that have already had their R&D and pilot-stage manufacturing paid for by VC firms, buying into hard-built technologies on the cheap."

"How Venture Capitalists Are Misplaying Nanotech" is part of the LR Nanomaterials Intelligence service. Clients receive: 1) State of the Market reports every six months; 2) ongoing technology scouting reports and proprietary data points in the weekly Lux Research Nanomaterials Journal; and 3) on-demand inquiry with Lux Research analysts. For information on how to become a client, contact John Schwartz at or (646) 649-9582.

####

About Lux Research, Inc.
Lux Research provides strategic advice and on-going intelligence for emerging technologies. Leaders in business, finance, and government rely on us to help them make informed strategic decisions. Through our unique research approach focused on primary research and our extensive global network, we deliver insight, connections, and competitive advantage to our clients.

For more information, please click here

Contacts:
Carole Jacques
Lux Research, Inc.
(646) 649-9585

Copyright © Lux Research, Inc.

If you have a comment, please Contact us.

Issuers of news releases, not 7th Wave, Inc. or Nanotechnology Now, are solely responsible for the accuracy of the content.

Bookmark:
Delicious Digg Newsvine Google Yahoo Reddit Magnoliacom Furl Facebook

Related News Press

News and information

A drop of water as a model for the interplay of adhesion and stiction June 30th, 2016

No need in supercomputers: Russian scientists suggest a PC to solve complex problems tens of times faster than with massive supercomputers June 30th, 2016

Surprising qualities of insulator ring surfaces: Surface phenomena in ring-shaped topological insulators are just as controllable as those in spheres made of the same material June 30th, 2016

How cancer cells spread and squeeze through tiny blood vessels (video) June 30th, 2016

VC/Funding/Angel financing/Loans/Leases/Crowdfunding

NanoLabNL boosts quality of research facilities as Dutch Toekomstfonds invests firmly June 10th, 2016

Oxford Nanoimaging to provide desktop super-resolution microscopes May 10th, 2016

ORIG3N Added to Companies Presenting at Harris & Harris Group's Annual Meeting, Tuesday June 7, 2016, the New York Genome Center April 27th, 2016

Philadelphia Mathematician Robert Clark Turns to Crowdfunding to Support Nanotechnology Research That Could Lead to ‘Flying’ Cars and Space Elevator April 4th, 2016

Nanomedicine

A drop of water as a model for the interplay of adhesion and stiction June 30th, 2016

How cancer cells spread and squeeze through tiny blood vessels (video) June 30th, 2016

Building a smart cardiac patch: 'Bionic' cardiac patch could one day monitor and respond to cardiac problems June 28th, 2016

Nanoscientists develop the 'ultimate discovery tool': Rapid discovery power is similar to what gene chips offer biology June 25th, 2016

Announcements

A drop of water as a model for the interplay of adhesion and stiction June 30th, 2016

No need in supercomputers: Russian scientists suggest a PC to solve complex problems tens of times faster than with massive supercomputers June 30th, 2016

Surprising qualities of insulator ring surfaces: Surface phenomena in ring-shaped topological insulators are just as controllable as those in spheres made of the same material June 30th, 2016

How cancer cells spread and squeeze through tiny blood vessels (video) June 30th, 2016

Interviews/Book Reviews/Essays/Reports/Podcasts/Journals/White papers

A drop of water as a model for the interplay of adhesion and stiction June 30th, 2016

No need in supercomputers: Russian scientists suggest a PC to solve complex problems tens of times faster than with massive supercomputers June 30th, 2016

Surprising qualities of insulator ring surfaces: Surface phenomena in ring-shaped topological insulators are just as controllable as those in spheres made of the same material June 30th, 2016

Building a smart cardiac patch: 'Bionic' cardiac patch could one day monitor and respond to cardiac problems June 28th, 2016

NanoNews-Digest
The latest news from around the world, FREE




  Premium Products
NanoNews-Custom
Only the news you want to read!
 Learn More
NanoTech-Transfer
University Technology Transfer & Patents
 Learn More
NanoStrategies
Full-service, expert consulting
 Learn More











ASP
Nanotechnology Now Featured Books




NNN

The Hunger Project







Car Brands
Buy website traffic