Oct. 10, 2002 — The U.S. government’s Advanced Technology Program has given $101.6 million to 40 research projects, at least seven of which have a small tech component.

This batch of awards contains the largest number of nanotechnology projects the ATP has ever selected, said Donald Bansleben, a program manager.

“We’re seeing more proposals in the area of nanotechnology, across all technology areas,” he said.

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The ATP, which is part of the Department of Commerce’s National Institute of Standards and Technology, functions as the federal government’s own venture capital firm. The program solicits grant proposals from companies engaged in “innovative” but “high risk” research, said NIST spokesman Michael Newman.

“The goal is to partner with industry to cost-share the early development of technologies that have the potential to spark important, broad-based economic or social benefits to the United States,” he said. “We are accelerating enabling technology, technology that will have significant impacts on industry or on quality of life or on the way things are done, such as in manufacturing or information processing.”

Companies that are awarded grants must demonstrate a “pathway to commercialization,” Newman said, and they also must show that they could not receive funds from traditional venture capital firms because the technology, while promising, is too financially risky for venture capital firms.

The program was started by the first President Bush, but when then-Rep. Newt Gingrich became speaker of the House of Representatives in 1994, he and many other conservatives attacked the program as “corporate welfare.” Gingrich, who is an active nanotechnology advocate now, continues to denounce the ATP.

Conservative lawmakers tried to kill the ATP for years, but were repeatedly foiled by President Clinton and ATP’s congressional supporters. Last year, the current President Bush announced he would make several changes to the ATP. In his 2003 budget, he would bring the agency’s budget down from $184.5 million to $107.9 million. The final numbers will be worked out by Congress.

Companies that won awards this year championed the ATP as a vital, and otherwise missing, link in the investment environment.

“We were very constrained with the speed with which we could develop the technology,” said Alex Dickinson, chief executive of Luxtera Inc., which won a grant for a total of $2 million during the next two years.

The Pasadena, Calif., company is developing a nanophotonic integrated circuit that will shrink optical switching systems used in telecommunications down from large, costly machines to a few microchips. Company engineers now are working to design, fabricate and demonstrate the performance of nanophotonic circuits integrated on semiconductor wafers. After making the circuits, the company plans to build a prototype device that incorporates all of the nanophotonic integrated circuit platform technology.

With the meltdown of large swaths of the telecommunications industry, it’s been difficult to find people willing to pay for telecommunications research and development, Dickinson said. Big companies like Lucent that in the past have invested in R&D are shrinking their budgets, and venture capitalists are reluctant to invest because “they are in it for an exit strategy, and an exit strategy is an Initial Public Offering, and nobody has done a technology IPO in a long time,” he said.

“This is vital infrastructure. Long-term, it continues to be a huge multimillion-dollar industry and it will grow again. For everybody to stop investing in telecommunications is dangerous,” he said. Officials with the ATP program, he said, “recognized the fact that there is a gap in the capital investment market right now that is causing people to shy away from this stuff.”

The company hopes to have some basic products by the end of 2003. The full benefit of the ATP grant, he said, probably won’t occur until either 2005 or 2006.

The Chattanooga, Tenn., company eSpin Technologies Inc., received about $2.5 million over three years to help it build a new system that will let it manufacture nanofibers much more inexpensively, and in much greater volume, than is currently possible.

The company is one of the few that has commercialized nanofibers, said Prakash Kunda, the company’s business development manager. The fibers, which are between 50 and 100 nanometers in diameter, are formed as a continuous web, or a “membrane,” Kunda said.

“The challenge has been to produce it economically on a large scale,” he said. The ATP grant, he said, “will help us do that.”

The nanofibers are an “infrastructure technology,” he said, that help companies overcome technological barriers. Engineers building medical filtration devices, for example, could use the nanofiber “membrane” in their products. The company is now working with a large automotive manufacturer to develop an air filtration system that is 450 percent more effective, he said.

The company is between 12 and 18 months away from commercialization, he said, thanks to the ATP grant. It’s been tough trying to get venture capital investments.

“This is still an emerging field, and most VCs are still recovering from the Internet bubble,” he said. “They invest in what they know, and nano is so new. There’s also the high-risk nature of the technology. It’s hard to predict if this company has a billion-dollar potential, and it’s hard to say who will succeed and who will not.”

The companies that were awarded grants to develop nanotechnology or MEMS include: