nanotechnology investing

Leaders discuss bridging gap between nanotechnology research and commercialization
Wednesday, Aug 8, 2007

By Jason Wiest
Arkansas News Bureau
LITTLE ROCK - Arkansas nanotechnology experts took a day off from their microscopic studies Tuesday to brainstorm ways to shrink the gap between their breakthroughs in the laboratory and the marketplace.

Industry and government leaders, venture capitalists and economic development officials participated in a roundtable discussion at the University of Arkansas at Little Rock entitled "Overcoming Barriers to Nanotechnology Commercialization," one of three meetings nationwide.

Most experts said the field requires large infusions of capital and that the problem is a lack of funding.

In Arkansas, most people are not interested in investing in start-up technology because they are neither familiar with technology nor investing in it, said James Hendren, formerly of Arkansas Systems.

But the venture capital industry is not going to change, said Tom Walker, UALR vice provost for innovation and director of the Nanotechnology Center.

"There are too many easy ways to make money," Walker said.

But an Arkansas venture capitalist at the meeting disagreed.

"From a capitalist's perspective, I think we tend to think there is more capital than there are good deals to invest in within the state," said Jeff Stinson, executive director of the Fund for Arkansas' Future, an angel investor fund formed for the purpose of capitalizing early-stage Arkansas-based companies.

Stinson said the fund, which has 57 members and is the only angel fund in Arkansas, has about $60 million in capital, $6.6 million of which is committed.

During the fund's existence, it has averaged 3.5 funding requests per month, and a third of the requests were from companies outside of Arkansas. Other angel funds in the nation average 15 to 20 deals a month, he said.

Commercializing nanotechnology is just going to take time because it's a young industry, he said.

But the state has had recent successes.

Two University of Arkansas professors and their respective companies received Recognition of Excellence in Innovation certificates Tuesday from the U.S. Department of Commerce. Undersecretary Robert Cresanti presented the awards.

Xiaogong Peng and his company, Nanomaterials and Nanofabrication Laboratories, were recognized for pioneering the manufacturing and application of high-quality nanocrystals in solution that can be used in solid-state lighting, light-emitting diodes, solar cells and biomedical detection.

Ajay Malshe and his company, NanoMech, were recognized for developing nanoparticle-based coatings and coating deposition systems that have unique properties such as extreme wear resistance, corrosion resistance, bio-compatibility and other attributes important for military and industrial products and for medical implants.

Both companies are spin-offs based on technology developed at the University of Arkansas in Fayetteville.

For such successes to continue, new investment vehicles need to be created, Walker said.

"The government's going to have to step up," Walker said.

Although Sen. Mark Pryor, D-Ark., said he recognized the importance of nanotechnology and was committed to fostering its commercialization, he said its difficult to get support from other lawmakers because of the military conflicts and other demands on federal funding.

Developing innovations can take eight to 12 years, he said.

"For a lot of people at the Capitol, that's just not very appealing," Pryor said, especially at a time when the nation's finances are strained, the national debt is high and the war in Iraq is still in full-swing.

Tax credits could encourage venture capitalists to invest in nanotechnology, Hendren said.

Grants and scholarships could also be used to educate engineers and scientists further, transforming them into entrepreneurs, another participant suggested.

It's extremely important that something is done, Walker said.

"If we don't step up the R&D investment at the federal level three to four times, we are going to fall behind," he said.

Russia recently made a $7 billion commitment to funding nanoscience over the next five years, according to Sean Murdoch, CEO of NanoBusiness Alliance USA.

"We're going to have to pay the bill one way or another," Walker said, whether the country increases investments in nanotechnology or pays the price by not increasing investments and therefore having a lesser impact on the world or security that's behind the times.

"The consequences are serious," Walker said.

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