Nanotechnology is poised to impact all major industrial sectors, unseating incumbent technologies in areas ranging from semiconductors to vaccines. These will represent completely new applications, not simply better or cheaper versions of what exists now, Aymeric Sallin, founder and CEO of NanoDimension, a venture capital firm specialising in nanotechnology investments told Science|Business.
While Europe has a very competitive position in nanotech research it has been slower in commercialisation and now risks being left behind. Elsewhere, money is pouring in to push products through to market.
Sallin should know. In the nine years since he founded NanoDimension, Sallin has been scouting the world for nanotechnology investments. In October 2010, he joined the then Governor of California Arnold Schwarzenegger in Moscow, to meet Russian President Dmitry Medvedev as a representative of a Californian Trade Mission to Russia. In November, he was in Beijing talking to officials about a new materials fund that is backed by the Chinese government. Soon after, Sallin visited Washington DC to share his experience of investing in nanotechnology with Senate and Congress members, at the tenth anniversary of the US National Nanotech Initiative.
When he started NanoDimension at the age of 28, very few believed a venture capital fund investing exclusively in nanotech start ups could be successful. Sallin gathered around him a group of passionate scientists and engineers from his alma mater, the Swiss Federal Institute of Technology of Lausanne. Together they raised a first fund of €45 million. That is now fully invested and a second is due to start investing later this year.
Intensive technical challenges
Unlike other fields in need of venture funding, social media for example, nanotechnology is highly technical and requires both deep scientific and deep industrial knowledge. “In order to choose and nurture a nanotechnology company to an exit, you need to not only attract the right entrepreneurs and find the best business model, but also to be able to help overcome intensive technical challenges,” says Sallin.
NanoDimension has been helped by the complex dynamics of nanotechnology. “Both life science and physical science applications of nanotechnology have tremendous potential to disrupt markets,” Sallin explains. “On the life science side, the use of synthetic nanoparticles in therapeutics and vaccines is attracting the most attention from investors. In terms of physical science investments, nanostructured layers for next-generation CMOS chips, nanostructured electrodes for batteries and nanopatterned filters for water cleaning are booming.” He adds, “Regardless of sector, the investments with the most upside leverage are completely new technological applications, not simply ‘better/cheaper’ revisions of what went before.”
From its formation in 2002, NanoDimension’s growth has been supported indirectly by public investment. The US National Nanotechnology Initiative has invested over US$14 billion since its inception in 2001, including $1.8 billion in 2011. China and Russia are equally competitive. Russia is investing a $4 billion sovereign nanotechnology fund with a focus on acquiring technology that is ready for manufacturing. Meanwhile, China has committed over US $20 billion to nanotechnology initiatives. “It is clear to me that everyone is paying close attention to developments in nanotechnology,” says Sallin.
Nanotech job creation
As far as governments are concerned one of the great attractions of nanotechnology is its ability to create both specialist and blue collar jobs. A case in point is Soladigm, NanoDimension’s latest investment, which is opening a plant to manufacture electrochromatic windows, providing over 300 jobs in a rural town in Mississippi. “This is just the first plant of many for Soladigm, and the same is true with many other nanotech companies,” Sallin says.
Another sign of nanotech’s momentum lies in the ability of start-ups to attract top executives. To succeed in commercialisation you need three key elements says Sallin: the smartest scientists, money, and the best CEOs. In the case of nanotechnology, over the past 30 years the best scientists have published thousands of articles in the leading scientific journals and been rewarded with Nobel and Millennium Prizes. This has generated the intellectual property on which to base solid companies. “To capitalise on this, governments have allocated tens of billions of dollars to nanotechnology development. Now, the best CEO’s are joining nanotech companies,” Sallin says.
NanoDimension’s portfolio companies have attracted top CEOs, including the former CTO of Motorola, Bertrand Cambou; the CEO of Solvay Pharma, Werner Cautreels; the President of Novellus Japan, Rao Mulpuri; and the President of Sequus Pharma, Scott Minick. Enticing people of this calibre from industries like semiconductors and pharma highlights the fact that nanotechnology is seen as the next frontier, Sallin believes.
These dynamics have translated into a growing number of opportunities. Since 2002, NanoDimension’s database has grown to over 6,000 companies and the number of high quality deals is increasing significantly. In 2010 NanoDimension screened over 1,700 companies and conducted due diligence on 173. “To put this in perspective,” says Sallin, “These 2010 figures are double those of 2007.”
Shopping for breakthrough products
In a further sign of increasing maturity, nanotechnology companies are beginning to find their way onto public markets. An example is battery manufacturer A123, which went public on Nasdaq in September 2009.
More exits have come from trade sales. “Big companies are shopping for breakthrough technology that will give them the edge with next generation products,” explains Sallin. Portfolio company Xtellus was acquired by Oclaro in December 2009, only 18 months after Nanodimension made its investment. Sallin believes that this type of acquisition is about to increase dramatically, as industries seek to reinvent themselves to remain competitive. “Nanotechnology has the ability to endow materials, devices, and systems with new molecular properties and functions, which means it will have an impact on almost every industry, from energy to pharma and electronics to automotive.”
If a Swiss venture capitalist has to travel the world to find investment opportunities - instead of investing locally as venture funds in other sectors do - this is because the dynamics of nanotech vary according to geography.
The reason, Sallin contends, is that, “Europe is competitive in nanotechnology research but challenged in commercialisation.”
With a long history of investment in government-funded research programmes in Switzerland, Germany, Scandinavia, France, the UK, and at the EU level, Europe has established itself as a pioneer in nanoscience. But competition to commercialise is global. “Russia is deploying a sovereign fund to upgrade its industrial fabric. China is allocating cash for manufacturing facilities and celebrating its entrepreneurs, in the US nanotech startups are flourishing.”
Sallin hopes Europe’s industries will become more aware of the potential nanotech holds to help them to reinvent themselves. And the door is open to European nanotechnology startups. Aymeric and his team want to hear the sound of knocking and are ready to help.