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Sept. 3, 2004 – As we approach the fall of 2004, let’s stop for a moment to assess the health and momentum of the nanotech industry and its state of maturity. As an emerging business arena, nanotechnology seems very healthy.
Every day, new application possibilities surface, more people enter nanotechnology as a pro-fession and discoveries are built on previously unique work. All momentum is positive and commercialization has accelerated. If this year is any model, next year should be amazingly productive and exciting.
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Many surprising developments will occur, and progress toward solving key application issues will be dramatic. Nanotechnology certainly is not mature; but it is entering its teenage years, those years characterized by ungainly and massive growth, increasing productivity and beginning wisdom.
The pulling of the Nanosys, Inc. IPO this summer was a good thing for nanotechnology, both short and long term. The marketplace (and not just Wall Street) showed that in our industry, having only prospects and intellectual property, without current products and sales (and profits) is neither accepteable or highly valued.
The pulling of the IPO also showed that a few early VC’s and investment funds couldn’t foist their folly on the public prematurely and in mystical multiples. Prematurely is the operative word here because eventually a growing and solid nanotech company should enter the public market and be highly valued. There is time for that.
A second lesson from the Nanosys non-IPO is that low, multiple, and early investors in germinal nanotech ventures must stay with their investments much longer. Investors need to add more funding until these ventures develop real value, or a modicum of maturity and presence in their markets, to justify those higher public multiples. These are good lessons to learn.
Nanotechnology is not the second coming of the dot.com era. My sense is that reality will dominate in nanotechnology assessment, at least in the short term. The nanotech industry has real technology creating real products with real sales in real markets, with a high cost of entry and true intellectual property protection. These are wonderfully positive assets.
Vaporware may not be able to crystallize in nanotech and that bodes well for the non-Nanosys companies that aren’t so hyped, giving them opportunity to prove through actual products and sales that they too should be highly valued. Yet, we are still early in the industry’s growth and Wall Street’s acceptance cycle.
What is so apparent today in the fall of 2004 is that the billions of dollars of government funds and corporate investment efforts worldwide (I emphasize worldwide, with two thirds of all in-vestments coming from outside of the U.S.) are beginning to show many tangible results. Monitoring the expanding number of discovery announcements shows us that exciting things are happening in nanotechnology.
Parallel efforts exist all over the world. Not only is one lab working to solve specific bottle-neck problems, many fully funded labs and companies are also racing to solve a myriad of impedimenta blocking the commercialization of nanotechnology in their specific industries, all at the same time. This parallel competitive development environment is very positive for the industry and is rapidly leading to breakthroughs, inventive products and a race to market those products commercially.
For example, in every market, one can identify the one or two technical or manufacturing bar-riers slowing down nanotech’s active exploitation or commercialization. Many of these are now beginning to fall because of the massive investment and parallel efforts.
A year ago, we had only one acceptable method for making useful quantities (tons) of single-walled carbon nanotubes. Now, there are four methods. All were announced within the last six months, half from outside of the U.S. A year ago, liquid could not be moved across a nanoarray. Now there is a proven methodology with more methods coming.
One year ago, nanobot movement was only modeled. Today, rudimentary nanobot movement has been performed using DNA segments and complements. Antibodies and proteins have been linked to nanotubes. Nanodots (quantum dots) are being manufactured in multiple locations and applied to identification and tracking uses that will shortly come to market, especially in the medical and pharmaceutical industries.
Patents are being nonexclusively sub-licensed throughout the nanotech industry to spur com-mercialization. Progress is tangible and specific.
Identifiable commercial applications of nanotechnology are in the final stages of testing for introduction as products next year. With these product introductions, private companies with a real presence in markets will surface, making next year, potentially, a good nanotech IPO year.
A word of caution: Not all is rosy.
We are still in the early development phase of the industry. We have yet to begin to create those designer molecules so often envisioned.
We have yet to show physically the self-assembly of designer molecules needed to mature the industry broadly.
We have yet to create new ways of implementing those major applications of nanotechnology that lead to disruptions of entire industry segments. We have yet to touch the toxicological, ethical and moral questions inherent in the application of nanotech in the world we live. All that is yet to come.
We are only in the enabler and integrator segments of market growth. There is much to ac-complish. We should all be pleased with the state of nanotech in the fall of 2004 and the speed with which developments and commercial applications are occurring. We should be even more pleased with the acceleration and momentum of the industry.
The economic stakes in nanotechnology are very high, billions of dollars in market after mar-ket. All the commercial opportunities are still available. There are no clear winners in any economic segment of nanotechnology now. This is a right place to be for the future.
The timetable for nanotechnology implementation, except possibly for those instances that in-clude FDA-approval requirements, is excessively long. Because of the massive amount of funding and worldwide competition, nanotechnology’s applications will occur far more rapidly and more broadly than predicted.
Stake out your positions now … next year may be too late.
Alan Shalleck is the publisher of the NanoClarity newsletter.