Nanotechnology: The Myths, The Realities, and The Opportunities

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• Nanotechnology The Myths, The Realities, and The
  Opportunities
• LES Luncheon Meeting
• March 25, 2004
• Tony Redpath
• 416-313-5212
• Vice President, Primaxis Technology Ventures Inc.

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A word from my sponsor

• Primaxis is an early stage VC fund investing in
  technology based opportunities in physical
  sciences and engineering wireless, photonics,
  biosensors, semiconductors, electronics, VoIP
  etc.
• 52 million under management
• Investors include Royal Bank Technology Ventures,
  BTG, Dupont Canada, Richardson Ventures Inc.,
  Battelle Memorial Institute, MDC Corporation, CIC
  Saskatchewan
• 16 investee companies
• www.primaxis.com

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Primaxis DFJ

• Management team at Primaxis (Ilse Treurnicht,
  Kerri Golden, Tony Redpath) is creating a new
  fund in partnership with Draper Fisher Jurvetson
• Same focus as Primaxis on early stage investments
• Interest in nanotechnology, particularly at the
  intersection with biotech or IT.
• Steve Jurvetson recently named one of the 2004
  Top 10 Nanotech Power Elite in the Forbes / Wolfe
  Nanotech Report

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What is Nanotechnology?

• 1 Nanometer (nm) 10-9 meter
• Nanotechnology refers to materials or processes
  occurring at the 100 nm or smaller scale

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Why Nanotechnology?

• Why chose to categorize things based on a
  particular size scale?
• Why not square technology? blue technology?
• Once you start to work at the scale of molecular
  dimensions, the properties of materials start to
  change dramatically. They are no longer a simple
  extrapolation of the properties of bulk
  materials.

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Why Nanotechnology?
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Why now?

• Actually, nanotechnologies are not totally new
• Langmuir Blodgett films ca. 1930
• Polymer Emulsions ca. 1950
• Ceramic powders lt 100 nm (Tungsten Carbide,
  Aluminum Nitride, Silicon Carbide produced by
  the tonne)
• Integrated circuits 130 nm feature size in
  production, 90 nm next, 60 nm in RD
• Hard disk drives Angstrom thick films in GMR
  heads
• .5 nm lubricant films
• Pharmaceutical emulsions

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Why now (cont.) ?

• One can reach the nano scale either by starting
  larger and working downwards (e.g. powder
  grinding) or by starting small (e.g. atoms) and
  building up.
• There are exciting new materials now being built
  by this latter route
• There are new analytical techniques (Scanning
  Tunneling Microscopy, Atomic Force Microscopy)
  that enable the accurate structural determination
  of these new materials

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Some examples of Nanomaterials

• Fullerenes (C-60)

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Some examples of Nanomaterials.

• Carbon Nanotubes

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Some examples of Nanomaterials.

• Quantum Dots

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Nanomaterials Analysis.

• Atomic Force Microscopy

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What are the Opportunities?

• The Nanotech industry is still mostly at the
  science stage, rather than the product stage
• More government RD funding than venture funding
• US US2.4 billion over 2003 - 2005
• Europe 1.3 billion over 2002 - 2006
• Japan US650 million in 2002 current spending
  comparable to US
• Canada ?
• NRC Nanotechnology Institute in Edmonton
• Many Universities have active nanotechnology
  research programs
• Rapid growth in number of nano companies (were
  tracking close to 200 of an estimated 400 500)

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What do VCs look for in Nanotech?

• ..the same things they look for in any
  opportunity!!!
• A novel protectable technology
• Large and growing markets where the technology
  fits a well defined need
• Strong teams of entrepreneurs (preferably serial)

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What do VCs look for in Nanotech?

• But
• There are opportunities outside of the
  conventional investment model
• mine the IP being created from all the govt.
  RD support and build a company to exploit that
  IP without necessarily knowing where it will be
  applied
• e.g. Compare Nanosys with Nanofilm
• New York Times article, March 15, 2004

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Two different approaches

• Nanofilm
• Founded in 1983 as Flexicrystal
• Located in Valley View, Ohio
• US1 million from friends and family
• 2003 Revenues over US15 million
• Profitable since 2001

• Nanosys
• Founded in 2001
• Located in Palo Alto, Calif.
• US55 million in Venture Capital US15 million
  form govt. research grants
• Does not expect to sell products commercially
  until 2006

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Two different approaches

• Nanofilm
• Founded by a chem prof from Case Western Univ.
  (Scott Rickert)
• Technology based on a new way to make ultrathin
  superrepellent coatings on glass, plastic and
  metal
• Sell coatings to keep rain off binoculars, to
  protect the shine on high end faucets, protect
  display screens on ATMs etc.
• Antistreak windshield coatings just released

• Nanosys
• Founded by a successful serial entrepreneur in
  the biotech field (Larry Bock)
• Has assembled a large portfolio of nanotech
  patents from places like Harvard and Berkely
• Hopes to ultimately find applications in products
  such as silicon solar panels, memory chips, thin
  films for flexible displays

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Some cautions

• Some public concern about the safety of
  nanotechnology the grey goo scenario
  (Michael CrichtonPrey)
• Most concerns are completely unfounded, but there
  are potentially real ones e.g. safety of
  nanopowders and nanofibers in view of past
  experience with coal, asbestos etc.
• Need to work proactively to avoid developing a
  public backlash similar to that against GM foods.

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More cautions

• There is much hype in the nanotech field. Many
  people are projecting what early stage
  fundamental research might lead to in terms of
  applications. In the hands of some promoters of
  the field, the timelines have been shrunken and
  the degree of uncertainty as to whether or not
  any real applications will actually come to pass
  has also been reduced. There is now a nanotech
  research lobby, as well as other nanotech
  organizations that have a vested interest in
  keeping the expectations high.