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December 24th, 2008
Entrepreneurship: Partnerships for prudent times
Joe Habib says he learnt how to run a technology company by working for a business that was profligate with cash. "Truck loads of new equipment used to turn up every day. We were spending money as though there was no tomorrow," Habib says of his four-year spell at Nanosciences, a Connecticut-based start-up that went out of business in the early 2000s after attracting about $10m (€7.2m) of investment funding. Habib now follows a more cautious approach. At Illuminex, a nine-person company that he started in 2003, he has steered away from trying to attract large amounts of early-stage funding. Instead, Habib has slowly built up credibility by partnering with bigger companies, raising cash by selling samples of his products and making use of small government grants.
Only in the past two months, as he feels he is making headway with his ideas to develop new types of materials based on ultra-thin strands of metal, has Habib been approaching venture capitalists about trying to raise serious amounts of money - perhaps as much as $3m - to support his plans. It is a stance that is in keeping with today's tough economic times. With banks and other financial groups desperate to conserve cash, investment groups are wary of putting large sums into businesses that have bright ideas but no proven products.
"It has become very important for new companies to demonstrate that they have a clear route to viable products, and linking with bigger companies can provide a way to do this," says Alan Brown, director of the Pittsburgh-based Pennsylvania Nanomaterial Commercialisation Centre. Backed by large companies such as US Steel and Alcoa, the centre promotes ties between big and small companies in efforts to develop nanotechnology. For Habib, it has been an exercise in how to survive with minimal money. The 48-year-old entrepreneur is a late starter to science and engineering. He finished a seven-year physics doctorate at Massachusetts Institute of Technology at the age of 38, after spells as a car mechanic and running a music publishing business.
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