nanoREV.

Is Nanotech Venture Capital Misplaced?

A recent Lux Research report notes that venture capital spending is out of sync with return on investment with the majority of the revenue coming from nanomedical start-ups but more funding going to non-medical start-ups. Due to many nanotechnology start-ups focus on materials platforms rather than specific applications the typical time frame for return on investment required by VCs (3-7 years) may in fact be unattainable by such start-ups lacking a specific product that requires their material. Other start-ups which do have a focus such as Nantero (carbon nanotubes used for non-volatile memory and logic) and Innovalight(silicon nanocrystal used for solar cells) are forced to compete with more established companies such as Samsung, Sharp, Fujitsu, Micron Technologies, Infineon, etc. which dominate the markets. Thus these start-up companies are confronted with the Herculean task of not only creating a groundbreaking technology that is competitive (preferably superior to) other approaches but also penetrating the web of marketing and distribution channels controlled by more established corporations.

At the same time there is some reasoning behind investing in non-medical applications of nanomaterials due to the possibility of a bigger overall payday for which true breakthroughs in the areas of energy production and electronics may provide. After all one of the earliest successes of venture capitalism, Fairchild Semiconductor, produced the Integrated Circuit which has impacted virtually every aspect of modern technology. Only time will tell whether one of the current start-ups supported by VCs will produce a similar revolutionary innovation.�