More Nanotech Gloom and Doom

Darryl Brookstein of The Nanotechnology Company, who splashed out top dollar on the domain ‘nanotechnology.com’ a few years ago just sent out a rather depressing missive reproduced below:

“More bad news continues to pummel nanotechnology investing and finance as both typical investors and professional ones alike recoil from even the use of the term “nanotech”:

Some examples of this deepening weakness from over just the last couple of months:

  1. One of six early candidates that we were watching closely went public via a reverse takeover of a shell on the Bulletin Board, contrary to my specific, emphatic advice: the stock is completely illiquid, trading “by appointment” roughly 60,000 shares TOTAL at about a $3.50 average price in almost 4 months!
  2. Public company, Biophan, has watched its $500 million market cap in 2002, based on nanotechnology that may enable MRIs to be done on folks with pacemakers, dwindle to an $11 million sale of that technology.
  3. Another nanotech company has delayed a Toronto Venture listing so many times that pre-public shareholder confidence is at risk of being lost.
  4. A technological favorite of ours wants to try the traditional venture capital route one more time. They will be unsuccessful, as their total dollars sought is far under the VC radar.
  5. Private company (once) extraordinaire, NanoOpto (about $70 million in VC money invested), and all its assets were acquired by a public company, API Nanotronics, for a ridiculous $4 million.
  6. The CEO of another company claims he has raised $1.5 million from an investment bank after more than 2 years of effort, but won’t name the firm for me until October when he has funds in hand (this is the 3rd delay date he has given me). Given the market and the early stage nature of his project, I seriously doubt this will come to fruition, at all, with ANY investment bank.
  7. Finally, Cambridge Display (Symbol-OLED), arguably the leader in polymer light emitting diodes, was acquired by Sumitomo Chemical for $280 million. That seems great, until you realize that that is exactly the valuation they raised their IPO from the public only 2 years ago!
  8. Nanogen (NGEN) announced they have contracted with Credit Suisse to help them sell their money-losing NanoChip instrument system.
  9. Leading nano-investor, speaker, promoter and VC. Steve Jurvetson, doesn’t even appear at nanotech conferences anymore (none in 18 months that I know of), and I defy you to find any reference to the words nanotech or nanotechnology anywhere on the home pages of VC and research analysts, Lux Capital or Lux Research (oh, wait, there is a banner ad for a conference on the Research homepage that has the word). Cleantech, Greentech, Alternative Energy, emerging technologies and even “de novo investments” (huh?) are now the catch words used by these folks who jumped on the NANO-bandwagon and now are jumping off that terminology fast as the money gets tight.

Hey, I don’t blame them. I’ve been using the phrase “small & advanced technologies” myself for the better part of 3 years!

But I was saying the bad times were coming back then – while many of these folks were incorrectly trumpeting the new millennia.”

Of course its not really that bad, unless you are one of the band of investors and entrepreneurs who decided to set up a variety of nanotech companies six or seven years ago in which case you may have lost some money you can afford to lose and have to suffer a slightly red face for a few weeks until the next opportunity comes along.

Perhaps the real lesson from all of this is that most people who plunged into nanotech or ran around trumpeting how it would change everything were technologically illiterate and thus unable to distinguish a nanotechnology based company from a dot.com disaster, but fear (of missing out on something) and greed (based on the trillion dollar market projections) have always been powerful drivers of investment.

From my perspective, I see nanotechnology in rather rude health these days. Our recent reassessment of the trillion dollar market numbers actually shows that things are pretty much on track. Most of the companies I work with have been making steady progress, and new applications of the technology are popping up all the time. In fact I probably see more good opportunities now than I ever have, now that we don’t have every Tom, Dick & Harry trying to clamber aboard the nanotech bandwagon. More tellingly, few of these companies have a ‘nano’ in their name.

I can understand the bitterness of those who bought into the fantastic dream of cancer curing nanobots and riches beyond your wildest dreams who feel that they have been hung out to dry, but any new technology always has the same two characteristics. First a posse of pundits will appear and run around hyping things and making a general nuisance of themselves, and secondly the technology will take far longer to mature than anyone thinks.

Despite Kurzweilian predictions of accelerating technologies, technological adoption is determined in the markets, not in the lab. As a rough rule of thumb, seven to ten years is about what it takes to get from a big funding initiative to commercial results, and we are already seven years into nanotech.

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