Nanotechnology Investments Stocks Companies

Investment decisions will be a major force in shaping how and where nanotechnology develops. Nanotechnology investments will largely be handled through partnership and technology licensing between companies rather than by young companies experiencing explosive growth.

Venture capital is money that is typically invested in young, unproven companies with the potential to develop into multibillion-dollar industry leaders, and it has been an increasingly important source of funds for high-technology start-up companies in the last several years. Venture capitalists are the agents that provide these financial resources as well as business guidance in exchange for ownership in a new business venture. VCs typically hope to garner returns in excess of 3050 percent per year on their investments. They expect to do so over a four- to seven-year time horizon, which is the period of time, on average, that it takes a start-up company to reach a liquidity event (a merger, acquisition, or initial public offering).

Nanotechnology start-up companies should not expect to defy fundamental business principles, as did the Internet companies of the mid- to late 1990s, if only for a brief period. Nanotechnology companies should expect to be measured by standard metrics and to confront the same industry dynamics and fundamental business issues (for example, personnel choices, sales strategy, high-volume manufacturing, efficient allocation of capital, marketing, execution of their business model, time-to-market challenges, and so on) that face the other companies in their relevant industry category.

Nanotech probably will be a big hit on Wall Street, but the timing will depend on progress achieved in moving products closer to market acceptance. Many of the nanoscience-enabled products being commercialized now are coming out of large companies. Examples include nanotube-based plasma televisions and personal care products. A limited number of smaller firms are introducing nanotech products in the short term. Most companies, however, are still refining the science behind paradigm-shifting technologies having massive potential. Commercialization issues include interfacing nanodevices with the macro environment, scalable manufacturing, and, in the health-care world, long FDA approval cycles.

Wall Street investors typically have preferred focused business models concentrated on growth from a narrowly defined technology or product group. Management focus historically