By John Carroll
Small Times Correspondent

DALLAS, March 11, 2002 — The nanotechnologists and venture capitalists who mingled during Nanoventures 2002 here late last week were in for some blunt talk about commercialization prospects. This conference never lost its focus on the bottom line.

“We didn’t want to have just another technology conference,” said James Von Ehr, chief executive of Zyvex, a Richardson, Texas-based nanotech firm and a key supporter of the event’s main sponsor, the Texas Nanotechnology Initiative (TNI). Small Times Media was also a sponsor.

But there was an underlying message that came through loud and clear. Behind the ambitious revenue forecasts and bold market projections, organizers were cheerfully frank about using the gathering as a stage to promote Texas’ bid to emerge as a leading development zone in the emerging field.

“This is all about that,” said Von Ehr, who’s been bankrolling TNI, a cheerleader for the nanotech companies springing up in Dallas, Houston and Austin. And the Lone Star State picked up a few high-profile endorsements over the course of the conference.

“Nanotechnology has reached a critical mass in Texas,” said Mihail “Mike” Roco, chairman of the National Science and Technology Council’s subcommittee on nanoscale science.

That’s a tonic to Texans, not known for being shy when it comes to self-promotion.

“Texas is right there at the starting gate with the rest of them,” said David Rex, president of TNI, as he pointed to the state’s attractions: the Richardson Telecom Corridor, the work of Rice University’s Nobel Prize-winning Richard Smalley and other Nobel laureates in the state. “Texas is becoming the state for nanotechnology,” Von Ehr said.

But Texas has a long way to go to establish an international reputation in the field. During a nighttime session linking Nanoventures 2002 and a Japanese nanotechnology conference, one of the Japanese participants said he knew of the nanotechnology work being done on the East and West coasts, but then asked, “Where’s Texas?” Rex said.

For the Texas cluster to really amount to more than the sum of its parts, said Dan Colbert, chief executive of Houston-based Carbon Nanotechnologies Inc., the state Legislature needs to step up and start doing more to promote growth and attract new investment — along the lines of California and New York.

“We’re about to go and approach the state,” responded Von Ehr, adding that a conference like Nanoventures 2002 can go a long way to waking up lawmakers to the prospects of an emerging industry.

Von Ehr hasn’t let his focus on lobbying distract him from the more immediate work involved in turning his $20 million investment in Zyvex into a moneymaker. He recently hired Ted Khoury as director of microsystems assembly with an eye to building some revenue for Zyvex. Khoury was previously R&D manager at Advantest America Inc., where he worked with MEMS.

“We think we’re not that far away from having some revenue,” Von Ehr told the crowd of more than 400 attendees. He plans to get to the break-even point in two to three years, but does not expect to achieve substantial profitability for at least six to eight years.

Every panel discussion included at least two venture capitalists to keep everyone focused on the main theme of Nanoventures 2002: the path to commercialization. For the VCs, the big question centered on which of the companies will be the first in their field to break out with handsome returns and high valuations.

“Everything is moving to an atomic scale,” said Terry Rock, a general partner with CenterPoint Ventures. “This rate of change is at warp speed.”

But that doesn’t make all the companies in nanotechnology winners, he added. There’s likely to be two or three big winners in every field, whether it’s nanomaterials, storage, assembly or whatever. Picking those companies, and timing investments just right, will be a big challenge for VC outfits.

“You can’t come back and invest in three years,” Rock said. “The door will be closed.”

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