nanoREV.

The decline of venture capital and the rise of patent markets

So far 2008 has set a 30 year record for a minimum number of venture backed IPO’s (5 in the first quarter and none in the second quarter). Meanwhile a consortium of large technology companies including Verizon, Google, Cisco, HP, and Ericsson have banded together to create Allied Security Trust (AST) which joins the likes of Intellectual Ventures and Ocean Tomo to create a market for patents (although with clearly different goals in mind). But how will these developments effect nanotechnology ventures?

First off there are a couple of things that may be noted about the nanotechnology innovation and business landscape that have been developed over the past 10-20 years such as

1)    A substantial percentage of nanotechnology innovation is developed from university research.

2)    A substantial percentage of the nanotechnology innovation that occurs is on the material rather than the system/application level. Thus most proposed applications of nanotechnology use the newly discovered materials (or material properties) to enhance existing systems/applications rather than create entirely new systems/applications.

3)   New markets are created by new applications not new materials.

4)   Without new markets there is no point in venture capital since more well established companies already control the existing markets and have more experience in all the necessary components related to the existing markets (e.g. customer relationships, advertising, manufacture flow, distribution system, etc.)

5)  The one advantage that nanotechnology start-ups have is their patents.

Given the above, it may be that venture capital backed IPOs are in fact non-optimal for many nanotechnology companies and a more efficient mechanism may in some cases be based directly on their patents.   �