By Jayne Fried
Small Times Correspondent

PALM SPRINGS, Calif., Feb. 12, 2002 - To show that nanotechnology is more than hype, David Soane stands before an audience of about 250 people at a nanotech investing forum, and holds up a pair of beige cotton slacks.

Molecular structures that are part of the Nano-Texprocess are much smaller than a grain of sand oreven a virus. That prevents the human eye, ortouch, from detecting even a minor differencebetween Nano-Tex fabric and regular fabric,the company says.
"This is a pair of pants," Soane says casually. "You can buy them in any Eddie Bauer," the retail chain with a store even in Palm Desert, Calif. That's not far from the table where Soane picks up a glass with liquid in it.

"Imagine you're at a cocktail party and you have red wine..." Soane empties the glass on the fabric. The liquid rolls off. "One hundred percent cotton," the Berkeley chemical engineering professor-turned-entrepreneur says triumphantly.

It isn't Scotch Guard or Teflon protecting the cotton. "Nano whiskers" poking up from the soft fabric repel the potential stain. The whiskers look like coils in a graphic Soane displays. In reality, at 10 to 100 nanometers long, they are invisible to the naked eye.

The firm that produced them, Nano-Tex LLC, appears to be a model nanotech company: Its technology is potentially disruptive, plus it has access to a huge market and a direct business approach. Less than four years ago, Soane hooked up with textile giant Burlington Industries, bypassing venture capitalists for backing.

"Nano-Tex is a company that uses nanotechnology for a very stodgy and mature industry - textiles," said Soane, the company's founder and chief science officer. "We have overcome the manufacturing and technology risks," he said. "Now we are testing the market risk. You, the audience, will be the assessors of the technology."

Soane was among 30 panelists who spoke during a Nanotechnology Investing Forum on Monday. International Business Forum (IBF) Conferences, based in Rockville Centre, N.Y., sponsored the event.

The Lodge at Rancho Mirage near Palm Springs, Calif. was an appropriate setting for the forum. Mountain peaks and rugged desert surrounded pristine golf courses and palm-lined estates that wouldn't be here on their own.

"Re-engineering of the natural world, with the imposition of our synthetic will. That's what nanotechnology is," said Cynthia Kuper, founder, president and chief of research at Versilant Nanotechnologies. The Philadelphia-area company develops carbon nanotechnology.

"Nanostructured properties are driving the industry," said Meyya Meyyappan, director of the NASA Ames Center for Nanotechnology and conference chairman. He said that modeling and simulation software to view three-dimensional images at the nanoscale is a rapid growth area.

The 10-hour conference was a crash course for people like Gary Swanson, president of Mentor, Ohio-based Thermotion Corp. Swanson will take back to a Midwest investor's group his take on funding small tech.

For Maria Xenophontos-Ioannou, managing director of Rosseter Holdings Ltd., which owns a nanotube production company in Limmassol, Cyprus, it was a chance to meet potential new investors. And there was a slew of investors to meet.

Venture capital presenters included Ark Venture Partners, ARCH Venture Partners, meVC, Lux Capital, nAbacus Limited, Double D Venture Fund and Almeda Ventures. Ann Arbor, Mich.-based Ardesta LLC, parent company of Small Times Media and an investor in nine small tech companies, was among the event's sponsors.

Getting down to basics, Rick Snyder was among the panelists who agreed that nanotech's "hype has gotten a little bit out of perspective." Ardesta's chief executive officer stressed fundamental business practices that center on the synergy between people in a company. That task alone can be daunting.

"In some cases, there are not a lot of researchers in this (small tech) industry," Snyder said, "But I would argue there are even fewer experienced business people active in this industry today."

"I would say the hype is limited compared to the dot-com era," countered Josh Wolfe, managing partner of New York-based Lux Capital. "We do not see one nanotech IPO after another." From his perspective, VCs should move earlier to fund nanotechnology - while efforts are in the lab.

"The bitter reality, but the truth, is that a lot of this is science, the vast majority is science," Wolfe said. "A new way (for investors) to allocate high-risk assets will go towards funding science."

Whether it's early-stage or third-round funding, "venture capital is rapidly increasing" in nanotech, said keynote speaker Steve Jurvetson, managing director of the Silicon Valley VC firm Draper, Fisher, Jurvetson.

Partnering with big companies that can either acquire a company, or distribute and market technology was stressed by more than one panelist. Companies in this area included Intel, Corning, Dow, 3M Corp., IBM, Motorola, Hewlett-Packard, Lucent and Hitachi USA.

Some startup companies to watch:

• Nanosys Inc.: The Palo Alto-based company has a powerful intellectual property (IP) portfolio that includes nanowire technology. Nanosys is close to announcing a new funding round, Larry Bock, president and chief executive officer, told Small Times. The company closed $1.7 million in seed funding last October. Founders include James Heath, director of the California NanoSystems Institute at the Universities of California, Los Angeles and Santa Barbara.
• AngstroVision: Based in San Francisco, the early-stage company is working on nano-imaging devices. The company has seed funding, but the amount was not disclosed. Scott Mize is president and chief executive officer.
• NanoMed Pharmaceuticals Inc.: The drug delivery company has technologies that include "nanotemplate engineering."
  

Kalamazoo, Mich.-based NanoMed was among three early-stage companies to win a business plan competition at the Nanotech Investing Forum.
Other winners were Seattle-based Apex NanoTechnologies, focused on developing molecular research software, and Santa Rosa, Calif.-based Quantum Polymer Technologies Corp (QPT). Stephen Nett, QPT's chief executive, said QPT is ready to market a "self-assembling plastic electrical conductor." The technology is emerging from 17 years of "quiet research and development," Nett said.