Tracking the Nano Evolution
larta.org
June 24, 2002
Not only is nanotechnology not a real market, it's not even a real industry or science community.
This appears to clash with the recent National Science Foundation proclamation that "nanotechnology has a projected total worldwide market size of over $1 trillion dollars annually in 10 to 15 years." This viewpoint is echoed not just from investors with cold feet or skeptical analysts, but from technologists whose work and research is focused on science at the nano-scale. Such a perspective is not borne out of a reluctance to validate nanotechnology, but is on the contrary, a testament to its vast range of possibility and application, which they say is both too broad and too nascent to be categorized.
"Yes, I'm reluctant to define it as an industry, and as a community," says Mike James of Rockwell Scientific, which has invested significant funding towards nanotech-related research and development, most recently in the area of nano magnetic particles. James will be speaking at next month's Nano Republic Conference at UCLA, which will bring together primarily California-based technologists, academics, and investors. James' background is in the materials field, which is one of the few nano applications that already has an industry track record, years before the term nano became the current hot high tech topic. No matter what market outcomes it produces in the near or long term, nanoscience will never be an industry unto itself, but a science of many avenues of application and possibility that could redefine the direction of several industries.
"I think the framework for this is to recognize that nanotechnology is a technology or set of technologies, and not a market. It's a set of technical breakthroughs that will seep into many different markets," says Arati Prabhakar, the former director of the NIST program who is now a venture capitalist with U.S. Venture Partners. "I think somewhat to the detriment of the field, you're seeing a lot of science fiction speculation about what's possible, and the great things that can be done, hype about the next big thing in terms of venture investing. That really creates a lot of noise because at the end of the day what you really get to is that nano is set of very amazing technologies. It's a very fertile research area, but it's not a particularly fertile area for venture investment. It's still very, very early stage, and there will be a few opportunities, but not many, in the next few years."
The attention has been extraordinary in nano recently, and despite the myriad of hype and hype artists, much of this is rooted in justifiable excitement for what technologists can do to harness nano for a variety of applications. Yet despite this, investor interest has been carefully plotted, largely due of course to the significant decrease in high tech venture investing in general. Rockwell Scientific, as well as other major research labs, have also been careful to invest R&D only towards nano applications that have near term market potential. What is the most important about the recent plethora of media introductions, reports, and publications is the attention it brings to the work that is being done in nano, not because of its ability to sway skeptical investors.
"Whenever you have these leapfrog technologies, there's no detailed roadmap to outline the future so there's a lot of analysis that has to go into the investments," James says. "I believe that the VC community is smart enough to sift through all the fluff, and I think that's why you're not seeing a great deal of investment at this point in time because the payoff is a great deal of years out."
Despite this careful approach amongst investors, the public and private money flowing towards nano has not been insignificant. A recent study published by the research firm In Realis found that $42 million of private investment has gone towards nanotech-related ventures in the first quarter of 2002 alone. Also, U.S. government spending towards R&D, although significantly behind from other countries, saw an ascent in 2001 to $495 million. Yet because nanotechnology is so dissipated, and often hidden under other umbrellas such as bioscience or electronics, treal numbers of total private nano investment flow have yet to be determined. Yet these figures do provide a strong argument that a rise in dollar commitment has been somewhat parallel to the rise of attention in nano. But despite the generally sober approach, nano investment, as well as nano attention, will likely see a sobering as real market outcomes become more clear.
"The hype for this whole area is going to be over in about 3-5 years," says Joe Lichtenhan of Hybrid Plastics, another speaker at the upcoming Nano Republic Conference. "I just think that within three to five years the market leaders for nanotechnology will be very apparent. And there will be a portfolio of nanotechnology companies for the public to invest in. Once the public market has appeared, and the clear market leaders are identified, there may be some valuation readjustment. It will follow a similar trend to when the dot com companies went down, except with more standing companies. And by then the public's attention will have turned to something else."
by Wendy Hall
Larta Staff Writer |
