Kudos to Dan Colbert, CTO of venture investor NGEN Partners, who has written a guest column in this month's Smalltimes with the main title "Enough nanotalk". (It's not online yet, so I'm going to quote more liberally than usual.) Colbert, who has past experience as CEO of a carbon nanotube startup, says some things that have needed saying for a while. I'm going to cherry pick his text - you'll have to take my word that I haven't Dowdified the quotes, at least until the column is online:
- ...it's important to dispell the notion that there is some intrinsic value talking about all the disparate activities of nanotechnology together.
- Nanotechnology is NOT an industry.
- There are, however, materials, which is a large part of what people really mean when they use nanospeak.
- Materials companies have traditionally been low margin, quick to commoditize and generally lacking pizzazz. These are not favored characteristics of venture-financed companies.
- We are in the process of gaining increasing control and finesse over the structure of matter at the smallest scale where material properties emerge. This is where the authentic focus of discourse and activity is, and ought to be.
- Materials were being characterized in the university, but... just what the materials might be useful for remained a mystery. As... Rick Smalley has said, "Bucky still doesn't have a job."
- Much more work is required beyond discovery and characterization to bring a new material to commercial success.... The venture challenge, of course, is sorting out the likely winners from the losers.
(Colbert also carries off an extended allusion to my favorite Kurt Vonnegut novel, but you'll have to RTWT for that.)
I would add a few elaborations to his observations. At this point, a winning nano-material is one that finds a specific applications market large enough to sustain and grow the company behind it, and where its differentiation is sufficient to overcome the low margin, no exit image of materials ventures. The diligent venture investor must carry through the entire analysis from basic science to applications market adoption.
There is no such thing as a nano-platform, a basic materials science toward which infrastructure investments may be pointed. Take as a contrast the world of silicon, where bringing in a plan for an improvement in yield, metrology, or tooling - to name a few - are all perfectly acceptable venture pitches. Silicon epitaxy really is a platform, with a multitude of applications. Much-touted generic nanotech - such as nanotubes and even more nanomachinery - lack the viable applications and market scale necessary to ignite a Moore's Law spiral of investment, adoption, and learning. Nanotech is not an industry, not a platform. It is a collection of materials applications conflated (cynics might say) to a sufficient scale to support conferences, newsletters, and consultants, not to mention grant writers.
For nanotech to really become an industry, it must find a way to achieve that sine qua non of the Valley: scale. Ironic, eh? I'll be back to that topic soon.