COMING AGE OF NANOBUSINESS

Mark ModzelewskiFounder & Executive DirectorNanoBusiness Alliance

May 4, 2002 Sea Island GA.

What is Nanotechnology?

Nanotechnology: The ability to do things – measure, see, predict and make – on the scale of atoms and molecules

Traditionally, the nanotechnology realm is defined as being between 0.1 and 100 nanometers, a nanometer being one thousandth of a micron, which is in return one thousandth of a millimeter

Ultimate Goal: Self-Replication

Nanotechnology: The Next Industrial Revolution

Nanotechnology will effect almost every aspect of our lives – from the medicines we take; to computers we use; to the energy supplies we require; to the food we eat; to the cars we drive; to the buildings we live in; to the clothes we wear

For every area where we can imagine the impact of nanotech, there will be others no one has yet thought of – new capabilities, new products, and new markets

Nanotechnology revenues are expected to reach over $200 billion by 2006

NSF predicts a $1 Trillion global market for nanotechology in little over a decade

Areas of Nanotechnology: Life Sciences and Medicine

Nanotechnology will expand life spans, improve quality of health and enhance human physical capabilities

About half of all pharmaceutical production will be dependent on nanotechnology – affecting over $180 billion in revenues in 10-15 years

Nanotechnology Developments in Life Science and Medicine:

Nanoparticle Tagging Drug Delivery Cellular Manipulation

Areas of Nanotechnology: Materials Science

When particles get small enough their mechanical properties change

Using nanoparticles in composite materials can enhance their strength and/or reduce weight, increase chemical and heat resistance and change the interaction with light and other radiation

Nanostructured materials are expected to be more than a $340 billion market within a decade (Hitachi Research Inst)

Nanotech lighting advances alone are expected to cut worldwide energy consumption by 10% in 10-15 years

Nanotechnology Developments in Materials Science:

Nanocomposites Nanofibers Nanoparticulate

Fillers

Areas of Nanotechnology: Electronics and Information Technology

In electronics the benefits of working smaller cannot be overstated

The semiconductor industry sees Moore’s Law coming to an end due to present materials and systems limitations –nanotechnology appears to provide the answer

Circuit elements will consist of single molecules

Nanoscale structures, such as quantum dots offer the opportunity to recreate the computer– developing the quantum computer

Nanotechnology Developments in Electronics and IT:

Organic nanoelectronics Soft Lithography Enhanced memory and storage Quantum Computing

Some Current Products on Market

Ceramics

Catalysts

UV protectant cosmetics

Specialty paints

Microelectronic components

Automotive components

Optical components

Anti-microbial dressings

“Self-cleaning” window glass

Clay fillers

Optical films for pc screens

Textiles

National Nanotechnology Initiative

Launched in 2000 by President Clinton

POTUS initiative marshalling resources of the agencies

Billions in other non- NNI programs for nanotech

Distributed $65 million in grants to 6 universities last year

Central source to evaluate, research and promote nanotechnology

Proposed 2003 budget: $679 million

Biggest success– told the world that nanotech is “real”

U.S Competitiveness Unlike past waves of technology innovation, nanotechnology is not

dominated by the United States

U.S. Government has developed a comprehensive National Nanotechnology Initiative (NNI) budgeting over $520 million in FY 2002

President Bush has proposed $679 million for the NNI in FY 2003. HHS, NASA, Defense and other agencies have billions in additional funds for nanotechnology efforts as well

The EC has earmarked $1.3 billion Euros for nanotech research over the next 3 years (individual EU nations are also spending ever increasing amounts)

Japan’s government will spend nearly $1 Billion on nanotech in 2003

South Korea, China, Canada, Israel, Switzerland, Australia and others are developing similar initiative to the NNI

Key NanoCenters

Austin/Dallas.Houston, TEXAS• Texas Nanotech Initiative• UT-Dallas• Rice Univ• Zyvez• Richard Smalley• Center for Nanospace Technologies• Start-up Cluster

5Metropolitan New York and New Jersey• Columbia Univ Nanotech Initiative• New York University• Highly educated workforce• Industry-Academic Partnerships• Financial Community• Nanobusiness Alliance

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Boston, Massachusetts• Harvard University• Mass Institute of Technology• Start-up Cluster

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Chicago, Illinois• Northwestern Univ• Chicago Nano• Venture Capital• 2 National Labs Michigan

Silicon Valley, California• > 50 Small Tech companies• Technology-focused Infrastructure• Academic Agenda• Talent Pool• Venture Capital• Culture of Innovation

Toronto

Southern California,Los Angeles, Orange County, San Diego• 30 Small tech companies• National Research Facilities• 4 major academic centers• Lower costs of business

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3

1

Upstate New York

Washington State

North Carolina

OhioNew Mexico

= Small Times Magazine “Hot Spot”

= Small Times Magazine “Places to Watch”

Major US Corporations in Nanotech

Publicly Traded US Nano Companies

Nanotechnology Start-Ups

Zyvex CNI Luna Nanotech

NanoSys NanoGram Ardesta

C-Sixty NanoPhase MEC

Quantum Dot CarboLex Covalent Materials

eSpin ZettaCore NanoProducts

Who’s Investing

Funding Nanoventures

Venture investment for 2002 projected to $1 Billion*

Most nanotech ventures are positioned in non-nano categories – biotech, storage, etc

VC firms are not necessarily the best funding source for most nanotech companies in 2002

Business models and types incompatible Many companies too close to R&D

phase– “Death Valley” issues

VC firms often lack nanotech expertise

Why Nano-Angels?

High risk (R&D stage)

Very hands on relationships needed

Less risk adverse

Less cynicism

Why Nano Corporate Venturing?

Materials science (manufacturing) investments work for them

Tie into corporate backend

Return models and goals often different from most VC firms

Current Trends (+) Nanotech is a burgeoning economic juggernaut

Significant government funding – US and Abroad

Rapid development of academic programs Over 30 nanotechnology programs across US Improved tech transfer operations

500+ nanotech companies at work in the US alone

Venture funding growing at rapidly – a lot of “dry powder”

Impressive corporate R&D budgets $100 million from IBM for Albany Nanotech $100 million investment from GE in new technologies lab Multi-million investments from NIAC, Matsui, Mitsubishi and others

Current Trends (-) Most nanotech companies are at R&D stage (seed)

Seed & start-up stages are often larger than other technology areas -- $4-6 million

Corporate: It’s an R&D issue not CXO issue

No industry standards

Researchers as CEO’s

Outside most VC return models

VC’s have little expertise in nanotech