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A new model for investors
OPINION
A new model for investors by Magnus Gittins Some estimate the impact of nanotechnology will top $1 trillion over the next
More than any other technology advance in the last 50 years, nanotech research
15 years. However this forecast unfolds, by any measure this is a great
requires unique, highly accurate, and very costly equipment. Investing in
opportunity. For scientists, it promises new tools to foster collaborative research;
equipment to extend resources of early-stage companies and academic labs is
for healthcare, it enables personalized medical solutions to chronic conditions
critical to supporting development. One way to avoid this cost is for investment
such as diabetes; for all of us, it promises greater convenience (e.g. flexible
to be shared by a portfolio of companies, diversifying risk and providing
television screens and wrinkle-free garments); for investors it offers the chance
resources to a broad spectrum of researchers. For example, an electron-beam
for tremendous returns. However, nanotechnology is reaching a critical point in
lithography system could be shared among a portfolio of partnership facilities,
its lifecycle – it must deliver on some of these promises or face a crisis of
rather than duplicating existing infrastructure. Costs can be cut further via
confidence. Investors and prospective customers are asking what the future holds
collaboration with academic institutes that have the equipment.
for the hundreds of new nanotech startups – which of these will be successful? While executive and administrative support is critical to early-stage companies, Exciting discoveries are made daily, but there is no guarantee scientists will have
it often siphons funds away from hiring researchers. Investors should provide the
access to key infrastructure to support commercialization. The development of
resources to hire new scientists, while assuming support functions for portfolio
nanotech-enabled products requires deep cross-disciplinary expertise. This
companies directly, until each can bring those functions in-house.
presents challenges to traditional research and development, particularly within corporations, which are constantly feeling the pressure for immediate profits. Universities, on the other hand, are increasingly fueling new nanotech discoveries, but don’t always have the expertise, charter, or assets to market them. The best and most promising technologies may never come to fruition.
Investors should also support and promote growth of their nanotech portfolio companies through a network of academic, industry, and commercialization partners. Early-stage companies often don’t have the relationships to bridge the gap between discovery and manufacturing. Investors need to: • Extend and diversify academic partnerships, building deep alliances with
Critical to ensuring discoveries fulfill their potential is striking a balance where
premier universities that have leading centers of nanotechnology excellence;
corporations and governments can work closely with universities to drive and
• Seek industry partners with a common goal of funding and guiding early-stage
finance product development in a low-cost, low-risk way. This includes ensuring
nanotechnology companies;
scientists have access to funding, research equipment, and support services such
• Seek licensees, purchasers, and joint-venture partners for portfolio technologies
as counsel in areas essential to commercialization, including intellectual property
as they mature. Smart investors will leverage majority control of technologies
law. We must create an environment where universities and corporations align
to choose the most value-generating route for commercialization.
their assets – intellectual capital, financial capital, and market knowledge – to ensure the most favorable outcome for these discoveries.
This investment model, though similar to the incubator popular with the technology community of the late 1990s, is more advanced and has precisely
56
For nanotechnology to succeed, investors must adopt a new model that
the resources needed by nanotech companies, which do not have strong existing
promotes the development of early-stage companies across a wide range of
infrastructure and are not widely understood by prospective customers, investors,
industries and geographies. This should focus on providing financial and
or the public. They need much nurturing to develop early-stage ideas through to
equipment resources, human resources, and a network of commercialization and
commercial success and often need help in educating key audiences. Marrying
manufacturing partnerships. In short, nanotechnology needs new models that go
industrial support to academic research bridges this gap between innovation and
beyond traditional venture capital to sensitive and reflexive financial support,
the market, and provides the economic environment and infrastructure for
supplemented by services that can ‘shepherd’ technological development toward
innovative solutions to be developed.
commercialization in a ‘participatory’ rather than ‘passive’ manner.
Magnus R. E. Gittins is president and chief executive officer of Advance Nanotech.
December 2005
A new model for investors by Magnus Gittins Some estimate the impact of nanotechnology will top $1 trillion over the next
More than any other technology advance in the last 50 years, nanotech research
15 years. However this forecast unfolds, by any measure this is a great
requires unique, highly accurate, and very costly equipment. Investing in
opportunity. For scientists, it promises new tools to foster collaborative research;
equipment to extend resources of early-stage companies and academic labs is
for healthcare, it enables personalized medical solutions to chronic conditions
critical to supporting development. One way to avoid this cost is for investment
such as diabetes; for all of us, it promises greater convenience (e.g. flexible
to be shared by a portfolio of companies, diversifying risk and providing
television screens and wrinkle-free garments); for investors it offers the chance
resources to a broad spectrum of researchers. For example, an electron-beam
for tremendous returns. However, nanotechnology is reaching a critical point in
lithography system could be shared among a portfolio of partnership facilities,
its lifecycle – it must deliver on some of these promises or face a crisis of
rather than duplicating existing infrastructure. Costs can be cut further via
confidence. Investors and prospective customers are asking what the future holds
collaboration with academic institutes that have the equipment.
for the hundreds of new nanotech startups – which of these will be successful? While executive and administrative support is critical to early-stage companies, Exciting discoveries are made daily, but there is no guarantee scientists will have
it often siphons funds away from hiring researchers. Investors should provide the
access to key infrastructure to support commercialization. The development of
resources to hire new scientists, while assuming support functions for portfolio
nanotech-enabled products requires deep cross-disciplinary expertise. This
companies directly, until each can bring those functions in-house.
presents challenges to traditional research and development, particularly within corporations, which are constantly feeling the pressure for immediate profits. Universities, on the other hand, are increasingly fueling new nanotech discoveries, but don’t always have the expertise, charter, or assets to market them. The best and most promising technologies may never come to fruition.
Investors should also support and promote growth of their nanotech portfolio companies through a network of academic, industry, and commercialization partners. Early-stage companies often don’t have the relationships to bridge the gap between discovery and manufacturing. Investors need to: • Extend and diversify academic partnerships, building deep alliances with
Critical to ensuring discoveries fulfill their potential is striking a balance where
premier universities that have leading centers of nanotechnology excellence;
corporations and governments can work closely with universities to drive and
• Seek industry partners with a common goal of funding and guiding early-stage
finance product development in a low-cost, low-risk way. This includes ensuring
nanotechnology companies;
scientists have access to funding, research equipment, and support services such
• Seek licensees, purchasers, and joint-venture partners for portfolio technologies
as counsel in areas essential to commercialization, including intellectual property
as they mature. Smart investors will leverage majority control of technologies
law. We must create an environment where universities and corporations align
to choose the most value-generating route for commercialization.
their assets – intellectual capital, financial capital, and market knowledge – to ensure the most favorable outcome for these discoveries.
This investment model, though similar to the incubator popular with the technology community of the late 1990s, is more advanced and has precisely
56
For nanotechnology to succeed, investors must adopt a new model that
the resources needed by nanotech companies, which do not have strong existing
promotes the development of early-stage companies across a wide range of
infrastructure and are not widely understood by prospective customers, investors,
industries and geographies. This should focus on providing financial and
or the public. They need much nurturing to develop early-stage ideas through to
equipment resources, human resources, and a network of commercialization and
commercial success and often need help in educating key audiences. Marrying
manufacturing partnerships. In short, nanotechnology needs new models that go
industrial support to academic research bridges this gap between innovation and
beyond traditional venture capital to sensitive and reflexive financial support,
the market, and provides the economic environment and infrastructure for
supplemented by services that can ‘shepherd’ technological development toward
innovative solutions to be developed.
commercialization in a ‘participatory’ rather than ‘passive’ manner.
Magnus R. E. Gittins is president and chief executive officer of Advance Nanotech.
December 2005