Science of small things

"Nanotechnology," Biochemistry Professor Michael Sailor said at a gathering of chemists in New York. "That's the irrational belief that something we are doing will be useful someday."
Long touted as the basis of a new industrial revolution, nanotech's potential is limitless, but, as Sailor ruefully notes, its usefulness has yet to be demonstrated. Todate only modest nanotech-based products have entered the market. Among them are wrinkle and stain-resistant fabrics, food packaging that keeps meat fresh longer, and tougher car plastics.
They mostly take the form of powders mixed in with conventional materials, adding strength or colour to the products - hardly life-enhancing stuff.
Nonetheless, some scientists predict nanotechnology eventually will be the only game in town, having more impact than all other technologies combined. "It will be a ubiquitous technology," says George Stephanopoulos, professor of chemical engineering at the Massachusetts Institute of Technology (MIT).
He echoes other nanotech supporters who say the world's industrial countries are already on the "slippery slope" towards its use in every aspect of manufacturing.
With such a huge gap between what is and what might be, it remains a difficult realm for investors, who cannot yet be confident that the global market will reach $1 trillion by 2015, as the US government predicts.
Investors are now just getting to grips with what is in the realm of the probable and profitable.
So what is nanotechnology? Essentially, it's a process that transforms everyday products and the way they are made by manipulating atoms so that materials can be shrunk, strengthened and lightened all at once. The potential applications are enormous, with microscopic computers, cancer-killing antennae and non-polluting car engines on the distant horizon.
Theory says it is all possible. A nano is a measurement of a billionth of a metre, or about the size of 10 hydrogen atoms. That translates into 1/80,000 the diameter of a human hair.
Aided by recent advances in microscopes, scientists can now place single atoms where they want for the first time. Materials used at this level of control feature properties drastically different because defects are eliminated.
This is far different from traditional manufacturing, which shifts atoms in massive, clumsy blocks. Scientists are learning to string together carbon atoms, for instance, in ways that will transmit signals, strengthen plastic, and lower the cost of flatscreen computers.
When it's all going to happen, though, is another matter. According to most scientific accounts, the nanotech future may be 10 to 20 years off, Scientists note that major hurdles stand in the way. Firstly, there is a lack of economic mass production. Some of the more complicated devices would require exact placement of billions of atoms.
"It may take the lifetime of the universe to complete the construction of [such a] device," says George Barbastathis, assistant professor in mechanical engineering at MIT. Another challenge is bridging the nanoscale and macroscopic, he says. In other words, the smallness of a nano device is useless when it must be attached to large wires. And it's unclear how scientists will overcome these problems.
"There's too much hype about making things small without too much reasoning," says Francesco Stellacci, MIT assistant professor of materials science and engineering.
Still, major corporations are tackling the learning curve, lured by a market with billions of dollars in potential profits. Giants like GE, Intel, Motorola and IBM are already heavily involved in research.
There are also a number of leading startups, like Carbon Nanotechnologies (CNI) in Houston and Frontier Carbon, a Mitsubishi Chemical joint venture. But at present it's impossible to tell which will become the next generation's Intel or Microsoft.
Governments are also taking an active role. The US Congress gave the field a big boost last November when it voted to increase funding for nanotechnology research to $3.7 billion over four years. "The idea behind this bill is simple yet powerful.
The American economy will grow bigger if America's scientists and engineers focus on things that are smaller," says House Science Committee chairman Sherwood Boehlert, a New York Republican who sponsored the bill. Noting fears about the potential dangers and misuse of the technology, the US nanotechnology bill encourages research into the technology's possible social impact.
Other countries have not been slow to see the potential.
The European Union has raised annual research subsidies for the 2002-2006 period to 1.3 billion euros and Italy hosted a European nanotechnology forum in Trieste, where progress in 10 different areas, including biomedicine, diagnostic tools and intelligent systems, were discussed.
EU-funded research has already yielded some potentially commercial products, such as light-emitting plastics for displays and reflecting particles in cosmetics.
Japan has been at the forefront of research since electronics company NEC discovered carbon nanotubes in 1991. Nanotechnology has become one of the government's four priority areas for investment: government funding for nanotechnology in Japan was $750 million in 2002. Over the next five years, it could grow to as much as $50 billion plus. "It looks like Japan, which was left behind in the biotechnology and IT revolution, wants to make sure it is in on the whole nanotech boom," says Ketaki Sood, research economist at US thinktank Larta.
Japanese corporations are also spending heavily -$1 billion in 2002 - and analysts say the country is ahead of other nations in developing commercial applications for that investment, especially in manufacturing and materials.
The big players in Japan's semiconductor industry, such as Toshiba and NEC, have already made the shift to narrower circuitry based on 90-nanometre processing technology. Japan's 11 main chip makers are now in talks to work together to develop manufacturing and design technologies at even narrower circuitry of 65 and 45 nanometres.
World-wide, the two industries with the potential to win big with nanotechnology are electronics and biotechnology, according to MIT researchers. On the biotech front, scientists are promoting the notion of nanoparticles made from gold that could be remotely triggered to heat and kill individual cancer cells.
It's that kind of project that gives nanotech the same appeal as biotechnology had in the 1980s, when scientists and entrepreneurs worked in tandem to fuel an industry with new advances in genetic research. The industry then had a clear goal: to develop new treatments that could generate billions and save lives.
Nanotechnology holds equal promise for wealth creation, but there isn't a consensus among venture capitalists (VCs) in how to realise it. "Which direction is it going to work out in? That's the question on everyone s mind," Gang Chen, an associate professor of mechanical engineering at the MIT, told scientists at a Boston nano gathering.
Despite their enthusiasm, VCs are finding a confusing assortment of new applications for a science that can baffle even the most experienced investor. Unlike biotech, where a range of prospective products is mostly limited to those aimed at treating various human diseases, potential nanotech-based products can be applied to diverse industries from healthcare to chip making to aerospace, posing challenges for VC specialists trained in only one area.
Products can be near-term or far off, but most are highly speculative. While VCs say they're looking closely at a growing number of new companies, many are staying on the sidelines for the time being.
Among the few to invest in the field is Apax Partners, the big British-American venture capital fund that invested heavily in biotech and technology in the past two decades. However, after looking at some 200 nanotech and related companies over the past year, Apax invested in only one, Nanomix, a nanomaterials company based in California. "There have been dazzling results in the lab, but people will get really excited when those dazzling results will be put into products," says Alex Wong, a partner in Apax's Menlo Park, California office. "That will take a number of years."
Furthermore, the academic, entrepreneur and investment banking network that worked in tandem to forge biotech super-stars like Genentech, Amgen and Chiron two decades ago isn't as cohesive after the demise of tech brokers like Hambrecht & Quist and Alex Brown. "There was a whole ecosystem of capital formation that existed then," says Peter Conley, director of equity research at MDB Capital Group, a Los Angeles brokerage that advises clients on technology stocks.
For Conley, the nanotech investing environment "is a little like the landscape in the emergence of personal computing," when apparent 1980s leaders like Atari and Commodore fell by the wayside, supplanted by Apple and IBM. "It was a large landscape and you couldn't figure out who was real or a leader."
Still, some apparent leaders are generating buzz in the VC community, such as Nantero and NanoOpto, according to Todd Hixon, managing director of Draper Fisher Jurvetson, a $1 billion Californian VC firm.
Massachusetts-based Nantero, for instance, is developing a nanotech-based super-chip that the company asserts "will replace all existing forms of memory." If achieved, it would be a truly "disruptive technology" in VC parlance. "The value is pretty clear and it's relatively close to a real market," says Hixon. Similarly, New Jersey-based NanoOpto is using nanotechnology to develop super-speed optical networking components, which could target a range of applications.
MDB's Conley says there are many promising nanotech companies that may never hit investor radar screens, but will be bought by larger technology companies. Others, he says, are already public but aren't perceived as nanotech companies. Among the latter is Headwaters, which Conley says is using nanotech processes to revolutionise the production of hydrogen peroxide, a chemical with a broad range of industrial uses. Another is Amcol International, which has a technology that Conley says could lead to new uses for PET, a chemical widely used in soda bottles. "This is where the rubber meets the road," says Conley. "Many nanotech companies don't even have an alpha product, but have thought-leaders with considerable know-how who have for the most part worked in academic settings."
The dazzling array of blue-sky companies has kept a lot of VCs on the sidelines, waiting for their promise to materialise. Many know that the hype that permeated previous dotcom and technology bubbles won't help them offload faltering investments to future buyers.
"These are true venture deals," says Warren Haber, partner in Mellon Ventures, a $1.4 billion fund that is considering several nanotech investments. "If they succeed, they will pop, and you will make a very large return on your capital".