COMING AGE OF NANOBUSINESS

April 02, 2002 Northwestern U.

About F. Mark Modzelewski

Executive Director of the NanoBusiness Alliance

Founder of Red Hook Partners

Former Director of NRW NYC

Clinton Administration Appointee

Attorney

About the NanoBusiness Alliance

The NanoBusiness Alliance is the first industry association founded to advance the emerging business of nanotechnology. The Alliance’s mission is to create a collective voice for the advancing small tech industry and develop a range of initiatives to support and strengthen the nanotechnology business community

What the Alliance Does

Research and Education

Public Awareness Campaigns

Public Policy

Briefings/Panels/Conferences

Industry Support

Alliance Facts

Founded in October 2001, by Mark Modzelewski, Nathan Tinker and Josh Wolfe

Nearly 200 Members -- Corporations; start-ups; universities; vc’s; government agencies; service industry firms; and non-profits

Advisory Board led by former House Speaker Newt Gingrich and famed venture capitalist Steve Jurvetson. Nearly 25 nanotechnology leaders serve on the Board including Rod Ruoff

Partnerships with Penton Media, Deloitte & Touche, Outrider, and others

Hubs in Canada, Denver, Israel, NYC, and Washington DC – 15 more planned by year’s end

Alliance Achievements

Hubs Initiative NanoBusiness News –largest industry newsletter www.NanoBusiness.org – “the” industry

destination Small Tech Reports & Directories First Industry Benchmarking Survey Public Policy Tours NanoBusiness Spring 2002 Small Talks Panel Series

What is Nanotechnology?

Nanotechnology: The ability to do things – measure, see, predict and make – on the scale of atoms and molecules

Traditionally, the nanotechnology realm is defined as being between 0.1 and 100 nanometers, a nanometer being one thousandth of a micron, which is in return one thousandth of a millimeter

Nanotechnology: The Next Industrial Revolution

Nanotechnology will effect almost every aspect of our lives – from the medicines we take; to computers we use; to the energy supplies we require; to the food we eat; to the cars we drive; to the buildings we live in; to the clothes we wear

For every area where we can imagine the impact of nanotech, there will be others no one has yet thought of – new capabilities, new products, and new markets

Nanotechnology revenues are expected to reach over $200 billion by 2006

NSF predicts a $1 Trillion global market for nanotechology in little over a decade

Key Trends Significant government funding – US and Abroad

Rapid development of academic programs Over 30 nanotechnology programs across US

Venture funding growing at 30+% per year

Impressive corporate R&D budgets $100 million from IBM for Albany Nanotech $100 million investment from GE in new technologies lab Multi-million investments from NIAC, Matsui, Mitsubishi and others

300+ nanotech companies at work in the US alone

Areas of Nanotechnology: Life Sciences and Medicine

Nanotechnology will expand life spans, improve quality of health and enhance human physical capabilities

About half of all pharmaceutical production will be dependent on nanotechnology – affecting over $180 billion in revenues in 10-15 years

Nanotechnology Developments in Life Science and Medicine:

Nanoparticle Tagging Drug Delivery Cellular Manipulation

Areas of Nanotechnology: Materials Science

When particles get small enough their mechanical properties change

Using nanoparticles in composite materials can enhance their strength and/or reduce weight, increase chemical and heat resistance and change the interaction with light and other radiation

Nanostructured materials are expected to be more than a $340 billion market within a decade (Hitachi Research Inst)

Nanotech lighting advances alone are expected to cut worldwide energy consumption by 10% in 10-15 years

Nanotechnology Developments in Materials Science:

Nanocomposites Nanofibers Nanoparticulate Fillers

Areas of Nanotechnology: Nanoparticle Catalysts

Many industrial processes are being affected by nanotechnology advances. Improved capabilities in making nanoparticles is allowing for making better catalysts

Nanotechnology Developments in Nanoparticle Catalysts:

Fuel Cells

Solar Cells

Light Sources

Pharmaceutical Processes

Areas of Nanotechnology: Electronics and Information Technology

In electronics the benefits of working smaller cannot be overstated

The semiconductor industry sees Moore’s Law coming to an end due to present materials and systems limitations –nanotechnology appears to provide the answer

Circuit elements will consist of single molecules

Nanoscale structures, such as quantum dots offer the opportunity to recreate the computer– developing the quantum computer

Nanotechnology Developments in Electronics and IT:

Organic nanoelectronicsSoft LithographyEnhanced memory and storageQuantum Computing

Some Current Products on Market

Ceramics

Catalysts

UV protectant cosmetics

Specialty paints

Microelectronic components

Automotive components

Optical components

Anti-microbial dressings

“Self-cleaning” window glass

Clay fillers

Optical films for pc screens

Textiles

QUESTIONS

Major US Corporations in Nanotech

Bills itself as the world’s leading nanotechnology company – few would argue

Nanotech R&D labs in New York, California, and Switzerland

Spends over $5 billion a year on R&D

Averages over 3,500 patents a year

Invented the STM and AFM

Recent Developments:

Carbon nanotube transistors

Atomic beam computer displays to replace LCD

Magnetic recording for storage

Nanostructure memory device

Bleeding edge nano fabrication techniques

All major auto companies are involved in nanotechnology research Fuel Cell Sensors Composite body panels Ceramic engines

With Basell, GM created a “step-up’ for 2002 van’s and suv’s out of a nano-composite

lighter than the conventional composites Stronger and more stability Improved surface appearance Easier recyclability

_

Publicly Traded US Nano Companies

Nanophase Technologies Corporation (Nasdaq: NANX) first nanomaterials pure play company in the world to go public

Nanocrystalline materials consist of ceramic and metallic materials in powder form

The company expects revenues of approximately $1.4 million for the first quarter – a 40% growth compared to the same period of 2001

Approximately 50% of 2001 product revenues were derived from various healthcare market segments, 40% from catalysts and environmental catalysts, and the balance from abrasion-resistant coatings and other applications

Best known for nano-suntan lotion

Dr. Siegel of RPI is a co-founder of Nanophase

Veeco designs, manufactures, markets and services a broad line of equipment primarily used by manufacturers in the telecommunications/ wirelss, data storage, semiconductor and research industries

Veeco has grown at a compound annual growth rate of nearly 30% per year since the IPO

In 2001, Veeco's revenues were nearly $450 million. Veeco employs approximately 1, 400 people around the world

Veeco metrology offers the world's largest array of methods for quantifying nanotech research, from sub-nanometer visualization to composition and thickness analysis

Atomic Force Microscope

Scanning Tunneling Microscopes

Dektak Stylus Profilers

Thickness and Composition Measurement Systems

Nanotechnology Start-Ups

Zyvex CNI Luna Nanotech

NanoSys NanoGram Ardesta

C-Sixty NanoPhase MEC

Quantum Dot CarboLex Covalent Materials

eSpin ZettaCore NanoProducts

Established in 1998, Nano-Tex is a privately held company in Greensboro, NC .

Burlington Industries, Inc. is the majority owner

Nano-Tex, LLC is a research company founded on the principles of nanotechnology creating new or improved textile properties through molecular engineering.

The addition of these durable molecular structures give fabric advanced performance characteristics without compromising the original hand, breathability or durability.

Lee Nano Jeans

Eddie Bauer Nano-Khakis

.

C Sixty Inc. was founded, in late 1999 by Dr. Uri Sagman, a Toronto-based medical oncologist and entrepreneur, and Dr.Stephen R. Wilson, Professor of Chemistry at NYU

Products are based on the modification of the fullerene molecule and include advanced products for the treatment of cancer, AIDS and neurodegenerative disease

C Sixty just raised US $4 Million in funding

Several Large Markets About to Enter ClinicalTrials including 

Fullerene HIV Protease Inhibitors

.

Zyvex's mission is to be the industry leader in adaptable, affordable, molecularly precise manufacturing.

First molecular nanotechnology company

Integrates macro, micro, and nano devices to the real world – top down and bottom up

Seeks to produce an array of MEMS, NEMS, and nanoscale devices

Awarded a $25 million, five-year, cost-shared NIST Advanced Technology Program award by NIST

Zyvex, its joint venture partner Standard MEMS, Inc. and university collaborators RPI, U. Texas at Dallas, and U. North Texas

Jim Von Ehr is the founder, President, and CEO of Zyvex

Who’s Investing

Average VC Investment per Company (2000) in US millions

Funding Nanoventures

VC firms are not a good funding source for most nanotech companies in 2002

Business models and types incompatible “Death Valley” issue

Corporate venturing model has benefits

Angels

Licensing models – outsourced R&D Tech transfer models –industrial parks

Questions

National Nanotechnology Initiative

Launched in 2000 by President Clinton

POTUS initiative marshalling resources of the agencies

Billions in other non- NNI programs for nanotech

Distributed $65 million in grants to 6 universities last year

Central source to evaluate, research and promote nanotechnology

Proposed 2003 budget: $679 million

Biggest success– told the world that nanotech is “real”

National Nanotechnology Initiative

(?)

In millions USD

Nanotechnology Across the World

China Japan Israel

UK Switzerland Germany

Russia South Korea France

Canada Australia Ireland

Nanotechnology is a global technology

Countries leading in nanotechnology include:

U.S Competitiveness Unlike past waves of technology innovation, nanotechnology is not dominated

by the United States

U.S. Government has developed a comprehensive National Nanotechnology Initiative (NNI) budgeting over $520 million in FY 2002

President Bush has proposed $679 million for the NNI in FY 2003. HHS, NASA, Defense and other agencies have billions in additional funds for nanotechnology efforts as well

The EC has earmarked $1.3 billion Euros for nanotech research over the next 3 years (individual EU nations are also spending ever increasing amounts)

Japan’s government will spend nearly $1 Billion on nanotech in 2003

South Korea, China, Canada, Israel, Switzerland, Australia and others are developing similar initiative to the NNI

Importance of Government

Government role at this nascent stage in the development of nanobusiness can’t be emphasized enough:

Basic Research Funding & Support

R&D Purchasing/Contracting “Death Valley”

Promotion Market and competitive analysis Marshalling resources

NNI Grants: 2001

$10.8 million

Center for the Science of Nanoscale Systems and their Device Applications, headed by Robert Westervelt. The center will emphasize interdisciplinary research on the properties of nanostructures, and partner with the Boston Museum of Science on outreach programs for middle school students and educators. $10.5 million

Center for Biological and Environmental Nanotechnology, with co-directors Richard Smalley and Vicki Colvin. The center will focus on bioengineering and environmental engineering with an emphasis on nanoscale biology and chemistry. It will concentrate on workforce training, recruiting underrepresented members, and entrepreneurship. Smalley is a winner of the 1996 Nobel Prize in chemistry, a professor of chemistry and physics and co-founder of CNI

$11.1 million

Center for Integrated Nanopatterning and Detection Technologies, headed by Chad Mirkin. The center will focus on patterning strategies for soft materials for applications such as chemical and biological sensors. It will provide outreach programs for high school teachers and help develop curriculum material, and will begin an entrepreneurial program. Mirkin is a chemistry professor and co-founder of NanoSphere and NanoInk

NNI Grants: 2001

$10.8 million

Center for Electronic Transport in Molecular Nanostructures. James Yardley will serve as director. The center will work with industry and national laboratories to understand the effect of charge in applications such as electronics, photonics and medicine. It will also provide programs for local high schools students. Yardley is a professor of chemical engineering.

$11.6 million

Center for Nanoscale Systems in Information Technologies, with Robert Buhrman as director. The center will focus on nanoscale electronics, photonics and magnetics and their impact on various technologies. It will collaborate with industry on teacher development and mentoring. Buhrman is a professor of engineering and engineering physics.

$10 million

Center for Directed Assembly of Nanostructures. The center will partner with the University of Illinois at Urbana-Champaign and Los Alamos National Laboratory in New Mexico on materials projects with applications as composites or in drug delivery devices and sensors. It will partner with several colleges in a minority mentoring program. Siegel is a professor of materials science and engineering and founder of Nanophase Technologies Corp., which is now a public company.

Universities Leading in Nanotechnology

Rice Harvard MIT

Cornell Columbia Purdue

U. New Mexico U. Texas VA. Tech

UVA North Carolina State

U. Washington

Northwestern UCLA NYU

Key NanoCenters

Austin/Dallas.Houston, TEXAS•Texas Nanotech Initiative•UT-Dallas•Rice Univ•Zyvez•Richard Smalley•Center for Nanospace Technologies•Start-up Cluster

5Metropolitan New York and New Jersey•Columbia Univ Nanotech Initiative•New York University•Highly educated workforce•Industry-Academic Partnerships•Financial Community•Nanobusiness Alliance

4

Boston, Massachusetts•Harvard University•Mass Institute of Technology•Start-up Cluster

6

Chicago, Illinois•Northwestern Univ•Chicago Nano•Venture Capital•2 National Labs Michigan

Silicon Valley, California•> 50 Small Tech companies•Technology-focused Infrastructure•Academic Agenda•Talent Pool•Venture Capital•Culture of Innovation

Toronto

Southern California,

Los Angeles, Orange County, San Diego•30 Small tech companies•National Research Facilities•4 major academic centers•Lower costs of business

2

3

1

Upstate New York

Washington State

North Carolina

OhioNew Mexico

= Small Times Magazine “Hot Spot”

= Small Times Magazine “Places to Watch”

Albany Nanotech Albany NanoTech is a global R&D center on the SUNY Albany

campus

Partnership between state, City, IBM and numerous other local, national and transnational corporations

The Albany NanoTech Complex currently has a net asset value in excess of $125 million and will exceed $500 million within two years

 Research park and incubator for nanotechnology

 “Build it and they will come” model of economic development

TNI is a state-wide effort to bring nanotechnology companies, researchers, and funding together to create an environment conducive to the rapid commercialization.

Serves to promote Texas nanotechnology achievements and attract start-ups, capital and talent to Texas.

Funds Chairs at University of Texas at Dallas.

Regional Chamber of Commerce Model

 “Nanotechnology is entering hypergrowth phase, with targeted programs in Pennsylvania and the northeast, and will most likely also see efforts in Illinois, California, and Washington. If we don't take the initiative now, we will lose the opportunity.”

Texas Nanotechnology Initiative

Regional Initiatives: Minatec (Grenoble, France)

Public/Private partnership in Grenoble, France – EC/Federal/Regional governments; corporations; universities; and start-ups

$160.3 million worth of buildings and clean rooms to house up to 3,500 staffers working on micro and nano projects

Minatec is building a 60,000 square meter state of the art center for entrepreneurs, students, professors, and researcher to work on developing products and launching start-up companies. It is expected to be completed by 2004

The site will house two engineering schools, joint laboratories for start-ups and the R&D teams of large corporations

“Build on success” model of economic development

Lessons from the Past on Building Technology Clusters

There is not a Texas solution for Virginia or a Chicago model for Brussels – but there are key lessons and best practices to learn from

Being out of the gate early is very important. Being out of the gate intelligently is more important

A pure government model won’t work. However, at this nascent stage – a pure private sector model won’t work either

Any successful plan for success must include these parties from the beginning:

Government

Corporations

Universities

Entrepreneurs

Non Profits

Service Industry

Investors