By Jeff Karoub
Small Times Staff Writer

Nov. 2, 2001 — A group recently formed to promote the business of nanotechnology predicts massive growth for the small tech industry.

But some scientists say it’s still too early to pop the cork and toast the tiny bubbles.

The NanoBusiness Alliance released a survey Thursday that projects the global market for the industry will reach $700 billion by 2008. And it said venture capital investments in the field will grow from $100 million in 1999 to more than $1.2 billion in 2003.

The survey was based on e-mail and phone interviews with more than 150 established startup companies involved in nanotech, microsystems or MEMS.

Firms were asked 25 questions, including revenues for the past year, projections for the next two years, and levels of venture capital funding each expected to receive during the next few years, said Nathan Tinker, the alliance’s executive vice president and author of “2001 Business of Nano.”

Tinker said he was surprised by the number of companies already reporting revenues in small technology, and the optimism many have for the future. But he said more accuracy will come with future surveys, which the alliance plans to conduct every six months.

“We’re getting a read on what the companies are thinking and feeling about themselves,” he said. “This is simply the first step, a baseline … measuring of what is happening.”

Mark Reed, a Yale University professor who specializes in molecular and nanoscale electronics, said the science is sound and early applications are here, such as nanoparticles for sunscreens and industrial composites. But he stressed that a fully functioning industry based on nanotechnology remains years away.

Unlike the Internet, which was able to grow quickly on a largely established platform, he said nanotechnology remains a manufacturing technology in its infancy, and the hardware is taking time to develop.

“I would caution people against the real quick advancement of this,” said Reed, who started Molecular Electronics Corp. last year with the aim of pursuing commercial application for microchips.

“Plodding is not the right term, but it’s going to be steady growth.”

Tinker said the survey’s findings are in line with the National Science Foundation’s prediction that the global market for nanotech will exceed $1 trillion annually within 10 years. But growth will vary among applications within the field, such as nanomaterials, which is developing faster than others.

He added that the “exponential jump” in technology necessary for nanotechnology is factored into the growth curve, which he said probably isn’t as tight or high as those for biotechnology and the Internet as they worked their way into the marketplace.

“On the other hand, nanotechnology has (those) models to follow,” he said. “Keeping an eye on that, the industry will be able to attack problems more quickly and with more clarity.”

Among the survey’s other findings:

• Revenues at the moment are small: 60 percent of those reporting revenues said they totaled less than $15 million during the past year. But 20 percent of respondents reporting revenues derived from nanotech products exceeded $50 million.
• Nearly 90 percent of the respondents who had received venture funding said they had received less than $5 million in the past year, and half of those said they had received less than $1 million. About 10 percent said they had received $5-10 million in the past year.
• More than 50 U.S.-based venture capital firms invested in nanotech-related companies in 2000, and some of the world’s largest companies, such as IBM, Motorola, Corning, Lucent and Hitachi, have launched significant nanotech initiatives.

The goal of the alliance, founded in September, is to create a collective voice for the emerging industry and develop initiatives to support the nanotechnology business community.

Specifically, the alliance is developing research and education programs, public policy and lobbying initiatives, public awareness campaigns and industry support networks from its New York headquarters and from a soon-to-open office in Washington, D.C.