April 24th, 2008
THE NEW YORK TIMES
Monday, December 24, 2007
Nanotechnology companies, nurtured on billions of dollars in government grants and venture investments through most of this decade, are getting ready to go public.
Being near to taking such a step is another stage in the evolution of nanotechnology, the science of materials measured at billionths of a meter, or 1/500th of a human hair.
Experts note that nanotechnology-enabled products are already used in industry.
“There are 200 commercial products in cosmetics, apparel and sporting goods in which nanotechnology plays a role,” said Lynn Foster, emerging technologies director for the law firm Greenberg Traurig and author of the 2006 book “Nanotechnology: Science, Innovation and Opportunity.”
Foster cites clothing with a coating of nanoparticles — from Nano-Tex Corp. of Oakland, Calif. — that repels stains.
And increasing numbers of nanotech products are in the offing.
Mihail Roco, senior adviser for nanotechnology at the National Science Foundation and an architect of the government’s research effort, predicted in an interview on the Web site of the National Nanotechnology Initiative that by 2015, nanotechnology will play a crucial role in $1 trillion worth of products, “which would require 2 million workers.”
Companies in nanotechnology speak of adapting their research to medical innovations, in which nanoparticles would deliver medicine directly to individual cells, and to solar energy, in which nano-enabled photovoltaic coatings would capture and store the sun’s energy at a lower cost than today’s solar panels.
The NanoGram Corp. in Milpitas, Calif., is aiming some of its research efforts toward such solar ambitions.
“We have 58 of our 69 employees working in R&D in the clean technology area, including solar power,” said Kieran Drain, chief executive of NanoGram, which earns money by licensing innovations to manufacturers of optical and electronic products.
NanoGram has a venture with Nagase & Co. of Japan, a manufacturer of light-emitting diode, or LED, screens for digital devices.
“Our nanomaterials enable the screens to emit more light,” Drain said.
In its 11-year history, NanoGram has spun off or sold operations to other companies in communications and medical electronics.
In the past two years, the company has raised almost $27 million in venture capital backing and looks to go public in 2009, “when we’ll have become larger in annual revenues,” Drain said.
Another company hoping to go public is Unidym Inc., which works with clusters of carbon nanoparticles that possess extraordinary properties in tensile strength and conduction of electrical current.
Sean Olson, vice president for operations and strategy, said Unidym is working with companies that produce the touch screens for cell phone devices, automatic teller machines and airport check-in terminals.
“Our carbon nanotube technology makes the light-emitting chipsets less brittle and able to emit more light,” Olson said. “Our screens can take a pounding.”
Unidym, based in Menlo Park, Calif., is a subsidiary of the Arrowhead Research Corp., a public investment company that was founded in 2003 to back small companies engaged in nanotechnology research.
Arrowhead, based in Pasadena, Calif., is advised by half a dozen professors at the California Institute of Technology.
In March, Arrowhead helped Unidym merge with Carbon Nanotechnologies, a Houston-based firm that was founded by the late nanotechnology pioneer Richard Smalley of Rice University, who won the Nobel Prize for his work.
“Unidym and Carbon Nanotechnologies make a powerful combination for the future of the semiconductor industry,” said John Miller, vice president of business development at Arrowhead.
Miller explained that nanoparticles, working at atomic scales, can produce semiconductors at more infinitesimal levels than current electronic technology and at lower cost than today’s manufacturing plants, which typically cost $5 billion to build.
Arrowhead Research is backed by Fidelity Investments, a mutual fund company; York Capital Management, a hedge fund company; and other public shareholders.
“As a public company, we can take a somewhat longer-term perspective on earning a return on investment,” Miller said.
He gave that as a reason Arrowhead was able to combine Unidym with Carbon Technologies.
Venture fund investors in Carbon Technologies, which was founded in 2000, “needed to get their money out,” Miller said.
Arrowhead can now reap its own return when it assists Unidym in going public, possibly next year if general market conditions are favorable.
The Arrowhead example points up two factors in the recent evolution of nanotechnology.
One is the role of universities.
In disbursing $8 billion in research grants since 2001, the National Nanotechnology Initiative has worked through 60 or so universities all over the United States.
And it is still working through the universities that have been designated as Centers and Networks of Excellence, including the Center for Nanobiotechnology at Cornell University; the Center for Scalable and Integrated Nano-Manufacturing at the University of California, Los Angeles; the Institute for Nanoelectronics and Computing at Purdue University and others.
The other factor is the fickleness of financial market opinion.
At the beginning of this decade, nanotechnology was greeted with predictions of instant wonders and investment success.
But when technological developments seemed to take longer than anticipated, investor enthusiasm cooled and nanotechnology was looked on as an overhyped promise.
Now attitudes are becoming positive again, Foster, the nanotechnology author, said, and “we’ll see many firms coming to the public markets.”