July 3, 2002 — Reactive Nanotechnologies Inc., a Baltimore-based developer of nanostructured foils for joining materials, has received $2 million in its first venture round, according to Caroline Worrall, the company’s chief operating and financial officer.

Toucan Capital of Bethesda, Md., led the round with $1.9 million. The Maryland Department of Business and Economic Development also made a $100,000 equity investment.

The company, founded in January 2001, was previously funded by its founders and a state grant. Worrall anticipates another venture round in 12 to 18 months for between $5 million and $10 million.

Reactive Nanotechnologies’ foils melt braze — a hard solder with a high melting point — with a chemical reaction to join materials without using an industrial furnace. It’s especially useful for joining materials with different properties, such as metals and ceramics. Worrall said the first application will probably be hermetically sealing containers for photo-optic devices.

June 27, 2002 — Santur Corp., an optical components company based in Fremont, Calif., announced the closing of a $23 million second round of venture financing. Thomas Weisel Venture Partners led the round, which included previous investors Sequoia Capital and Menlo Ventures, in addition to strategic investors.

Santur said it will use the funding to complete Telcordia qualification of its first product, the TL1010-C tunable laser, and to accelerate product development and delivery.

The company netted $20 million in its first round of funding in February 2001 and also secured a $10 million lease financing contract in June of last year.

When ARCH Venture Partners and four other firms led a $15 million second round of financing for Nanosys earlier this year, it looked a lot like any other funding announcement.

But Nanosys CEO Larry Bock says ARCH’s unusual approach to finding investments is as vital to Nanosys’ business plan as the money it contributes.

“ARCH is really networked into the university IP scene,” said Bock, a veteran of four other ARCH-funded companies. “We’re using a lot of their know-how and connections. Our company is based on a set of technologies that we’ve licensed from a number of different places.”

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Nanosys holds licenses from Harvard University, the University of California, Berkeley, and the University of California, Los Angeles, to manufacture electronic devices based on nanotubes, nanowires and quantum dots. ARCH also led Nanosys’ seed round of $1.7 million last year.

ARCH Venture Partners was investing in nanotechnology way before it was fashionable because its partners make it their business to recognize big ideas. If they think an idea can yield major applications and a fat sheaf of patents, they’re willing to make a bet.

“We consolidate the IP position early to mitigate our risk,” says Managing Director Keith Crandell, who has been with the firm since its founding and played a key role in perhaps the earliest nanotech venture investment: in Nanophase Technologies Corp. of Romeoville, Ill., whose most famous current product is nanoparticles for use in sunscreen. Nanophase was founded in 1989 and went public in 1997.

Crandell likes the IP potential in nanotech. “Most companies in nanotechnology are very deep innovations and they have very strong patent portfolios.”

Unlike many venture capitalists, who like to see a product idea, a management team and a business plan before they hand over money, ARCH Venture Partners prefers getting into an investment very early, as co-founder or leader of the first round of funding. The principals study top research institutions, looking for inventions that might flourish with a little seed capital and a large helping of business smarts and connections. They take a board seat and actively participate in managing all their companies, as well as leading additional funding.

By staying immersed in research environments, ARCH is able to track fledgling technologies long before they flutter across the radar screens of most investors. One of its investments, Caliper Technologies Corp., began in 1995 as the first company to develop lab-on-a-chip as a commercial proposition, based on research done at Oak Ridge National Laboratory. ARCH Managing Director Robert Nelsen serves on the company’s board.

“When we started, nobody was focused on lab-on-a-chip at all,” said Mike Knapp, Caliper co-founder and chief executive. “People didn’t know what we were talking about. Bob Nelsen and his associates had already identified that area as being of interest. That sets them apart.”

Its strategy is appropriate for a firm that had its roots at the University of Chicago, where several of its principals handled technology transfer for the university and Argonne National Laboratory, which U of C manages for the U.S. Department of Energy. ARCH is a quasi-acronym for ARgonne CHicago, and ARCH Development Corp., a wholly owned not-for-profit university subsidiary, was founded in 1986 to commercialize the bounty of intellectual property generated by the two institutions. Nanophase grew out of research at Argonne, and Crandell got involved with that investment when he was still with ARCH Development Corp.

Confusingly, not one but two groups of ARCH Development Corp. employees found the possibilities so tempting that they branched out on their own. ARCH Venture Partners was first, in 1992. A second, unrelated firm, ARCH Development Partners, launched in 2001. Subsequently, the university abandoned the subsidiary model (and the ARCH Development name) and now handles tech transfer through UCTech, an in-house office.

Headquartered in Chicago, ARCH Venture Partners eschews the usual Silicon Valley and Route 128 outposts in favor of offices in New York, Seattle, Austin, Texas, and Albuquerque, N.M. It has done deals with researchers at more than 30 top research institutions, including not only Argonne and U of C, but also six other Department of Energy labs and a plethora of teaching hospitals and universities.

“They have such strong expertise that they can identify technologies very early,” said Jim Downing, president of the Illinois Venture Capital Association. “They’re very, very good at it or they wouldn’t still be around. The limited partners are the ones that judge the ultimate success of a venture capital firm, and ARCH has been getting funding year in and year out.”

The firm has funded more than 90 companies since its inception and of those, 26 are currently public or have been acquired by other companies. It has put together five different funds and its long list of investors includes not only many of its peers, but also corporate giants like 3M, Hoffman-LaRoche Ltd, Dow Chemical and Johnson & Johnson.

Sniffing out new ideas is time-consuming, and ARCH has 20 full-time employees, which Crandell says is about twice what’s typical for a firm at ARCH’s level. It has $700 million under management.

With a successful exit from Nanophase, small tech continues to be a key investing interest. At any given time, three or four of about 25 portfolio companies will have some micro- or nanotechnology component, Crandell said. These days, his preference is for devices rather than materials. The firm’s investments include Illumina, which makes fiber optic arrays for use in genomics and proteomics; and Surface Logix, which is developing miniaturized bioassays for drug discovery.

“We may look at something two or three times before we go for it,” Crandell said. “It’s not like you have an existing market and an empirical test [for success]. But we’re trying to pick the things that will seem obvious three to five years from now.”

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PASADENA, Calif. — “Take just one thing that you love about science and, no matter how complicated it is, figure out how to make it understood by a million people,” actor Alan Alda proposed to about 500 graduates Friday during his commencement speech at the California Institute of Technology.

Regardless of whether graduates take Alda up on his challenge, there will be more science for them to explain because funding has flowed into Caltech.

On the northwest corner of the campus, the Broad Center for the Biological Sciences is near completion. The building will be dedicated in September, according to Benjamin Rosen, chairman of Caltech’s board of trustees.

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The building is the cornerstone of a $111-million initiative to strengthen Caltech’s research in the biological sciences, including nanobiotechnology.

As one example of the link between nanoscience and biology, James Heath, acting director of the California NanoSystems Institute at the University of California, Los Angeles and UC Santa Barbara, is leaving UCLA next year for a teaching and research post at Caltech. Building “an immune system on a chip” is his lab’s new challenge, Heath told Small Times recently.

The Broad Center is named for Eli Broad, Caltech trustee and Los Angeles business and civic leader, and his wife, Edythe. The Broads provided $23 million for the 120,000-square-foot building, which will include laboratories and offices for 10 to 12 new research teams working in such areas as structural, behavioral and computational biology.

In addition, Caltech last year received two gifts totaling $600 million, half from Intel Corp. co-founder Gordon Moore and his wife, Betty, and half from the Gordon and Betty Moore Foundation.

“By far the largest gift ever given to any academic institution,” Rosen said. “Its effect on the institute will be enormous.”

Moore is widely known for “Moore’s Law,” which he formulated in 1965. The law stated that the number of transistors the semiconductor industry would be able to place on a chip would double every year, a trend he forecast would continue through 1975. In 1975 he updated his prediction to once every two years.

Gordon Moore was unable to attend commencement ceremonies Friday, and missed what Rosen described as a “mildly historic” moment. Alda was the first actor to ever give a commencement address in Caltech’s 108-year history, Rosen said.

Alda was there because he portrayed the physicist Richard Feynman in the play “QED.”

The play, which premiered at the Mark Taper Forum in Los Angeles and concluded its run at Lincoln Center’s Vivian Beaumont Theater in New York on June 10, takes place in Feynman’s office at Caltech where he was a professor for 38 years.

“What part of him do you focus on?” asked Alda, who spent more than six years on a “maddeningly hard” journey to discover who Feynman was.

“He helped create the atomic bomb, he helped figure out why the Challenger blew up. He understood the most puzzling questions in physics so deeply that they gave him the Nobel Prize. Which facet of him do you let catch the most light? The revered teacher? A bongo player? An artist? The hilarious raconteur?”

In the end, Alda said it was a mathematician friend who suggested “just as Feynman saw a photon as taking every possible path on its way to your eyes, Feynman himself took every possible path through life.”

One path led to nanoscience. Feynman predicted the age of nanotechnology in 1959 during a lecture at Caltech. His talk, “There’s Plenty of Room at the Bottom,” outlined the concept of moving individual atoms around to build molecules.

Alda asked the black-gowned graduates on a sunny day in Pasadena to “share science with the rest of us.” And, to share it as Feynman did.

One constant in Feynman’s travels, Alda said, was his honesty. “He never wanted to deceive anyone, especially himself. He questioned his every assumption. And when he was talking to ordinary people about physics — people with no training in physics — he never fell back on his authority as a great thinker. He felt if he couldn’t say it in everyday words, he probably didn’t understand it himself.”

Feynman “wasn’t interested in dumbing-down science,” Alda said. “He was interested in clarity. If he left something out, he told you about it … so you didn’t get a false picture of a simplicity that wasn’t there.”

There was another part of the equation. “Share your love of science with the rest of us. But just not because explaining to us what you do will get you more funding for what you do. Although it surely will,” he added. “But just because you love what you do.”

June 17, 2002 — nPoint Inc. of Middleton, Wis., a provider of precision motion devices and controllers for nanoscale research and manufacturing, announced the closure of an initial round of funding from four Wisconsin-based angel investing networks: Early Stage Research LLC, Wisconsin Investment Partners LLC, Silicon Pastures LLC and Origin Investment Group LLC. Early Stage Research led the $1.1 million round.

nPoint, previously known as Piezomax Technologies Inc., is on target to break even by the end of next year, according to John Biondi, chief executive. He anticipates closing on another round of funding around the same time. “We have the potential for a strategic round with some of our customers and we’re working on venture as well.” Biondi expects the next venture round to be in the $3 million to $5 million range.

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The idyllic landscapes of Auvers-sur-Oise, north of Paris, are known the world over thanks to paintings by Paul Cezanne and Vincent van Gogh. Less well known is that it is also the location of the world’s first nanofiltration facility for drinking water.

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Just across the Oise River from the town center stands Generale des Eaux’s 3.5 acre Mery-sur-Oise treatment facility. The company, a unit of conglomerate Vivendi Universal, is contracted by SEDIF, the water utility for the area surrounding Paris, to supply four million people with drinking water.

With the quality of water resources deteriorating and tightening quality standards being imposed by the European Union, utilities have been looking for innovative ways to clean water. Generale des Eaux developed the nanofiltration technology in its own labs in collaboration with Dow Chemical subsidiary Filmtec.

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“We have been cleaning water at this plant using a biological treatment system here since the 1960s,” said Daniel Dubois, senior engineer at Generale des Eaux. “The nanofiltration began two-and-a-half years ago and now makes up 80 percent of the water that leaves the plant on a typical day.”

With little groundwater available in the Paris suburbs, 95 percent of the city’s water must come from three different rivers: the Oise, the Marne and the Seine. Traditionally, river water was cleaned by injecting positively charged aluminium salts. Working much like a magnet, the salts would instantly attract negatively charged floating matter and slowly bring it to the bottom of the basin. The water would then go through a series of filters and an ozonization process. The final step, chlorine disinfection, killed whatever was left, but also gave water an unpleasant taste.

“The problem we had in this location is that the water in the Oise is particularly heavy with organic material during the wintertime and only nanofiltration could take it out,” Dubois explained. The water contains an average of 10 milligrams of organic matter per liter, more than double what you might find in the nearby Seine.

The nanofiltration process starts with the same positively charges aluminum salts to take out the biggest floating particles. The water is then ozonated to kill the algae. Then comes the anthracite and sand filters with holes of 1.2 and 0.8 square millimeters.

From then on, things gets smaller and smaller. After nitrification to remove ammonia, pumps press the water into a microfiltration membrane with openings measuring around 5 microns in diameter.

After this, the water is pushed through polymer membranes whose holes measure just under 1 nanometer each. Pumps create between 8 and 15 bars of pressure, the equivalent of standing under 80 to 150 meters of water, to drive the water through the tiny holes. As a final measure, the water is disinfected with ultraviolet rays.

The 6,000 or so residents of Auvers-sur-Oise have been drinking this nanofiltered water for almost 10 years, since the town was chosen as an experimental test site. They say the nanofiltered water tastes better because it doesn’t have the taste of chlorine found in other tap water. In fact, the Cordeville restaurant in town has stopped serving bottled water altogether, figuring the tap water is now just as good.

But there are drawbacks. This treatment system is more expensive than the traditional process. All that water pumping makes for a higher energy bill – 60 percent higher.

In addition, the holes in the nanofiltration membranes are so small, that they take out useful particles along with the bad ones. “It takes out a good part of the calcium and magnesium present in the water,” said Antoine Montiel, a water expert from SAGEP, the company in charge of managing Paris’ water. He added that the plant at Mery-sur-Oise must remineralize the nanofiltered water by adding 20 percent of water cleaned by traditional means.

The advantages, on top of better tasting water, are logistical. For one, it can be managed from a distance. The plant at Mery-sur-Oise is strangely deserted. Most of the personnel works in the command center, where they control everything going on in the plant. “Nanofiltration plants can be highly automated and possible to manage from afar,” said Dominique Tricard, head of the French Ministry of Health’s Water Risk Evaluation Unit. “This means less personnel is required, making it particularly attractive for treating difficult-to-get-to underground water sources.”

Generale des Eaux isn’t the only utility harnessing the power of small tech to clean water. Competitor Ondeo, the water unit of French conglomerate Suez, has installed what it calls an ultrafiltration system, with holes of 0.1 microns in size, in one of its plants outside Paris.

Generale des Eaux has also been selling its technology to others. Most recently, Israel signed a turnkey contract for a nanofiltration plant adapted for seawater.