Nanotechnology research funding up, venture capital down

Filed in archive Investing by george elvin on August 14, 2006

More than $9.5 billion was spent on nanotechnology research and development worldwide in 2005, a considerable rise as compared to 2004. But $9 billion of that was from governments and corporations, says "The World Nanotechnology Market (2006)" report from Research and Markets.

And VC's may be backing off even more in 2006. Venture capital investments in MEMS and nanotech companies in the first half of 2006 were down 15.4% compared to the first half of 2005, according to Bourne Research.

Nanotech start-ups were the hardest hit, with funding down 38.7%.

"I'm scared of anybody with nano in their name," said Kevin Landis, who manages about $700 million at Firsthand Capital Management in San Jose, California. "With any new wave of technology, there's ample opportunity to invest in companies that don't end up being the winner."

Those words of warning fit well with my observation here a few weeks ago that many nano companies are dropping the "nano" from their names.

But don't worry, there are still plenty of success stories. Altair Nanotechnologies' revenues more than doubled in the second quarter of 2006 compared to the second quarter of 2005. Altair is a leading provider of advanced nanomaterials technology for use in energy, pharmaceutical, life sciences and industrial applications.

Despite the venture capital slump, the prospects for nanotech remain good. By 2008, the total global demand for nanoscale materials, devices and tools will cross $28 billion, says the Bourne report.

The report added that silver nanoparticles, chemical sensors, tri-axis accelerometers were product niches bearing close attention


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