The Wannabe Venture Capitalist

Tuesday, September 20, 2005

Nanotech & Cancer

I have been hesitant to evangelize nanotech on my blog because I know VCs are still a little timid about investing in the area. Quite frankly, they should be. Nanotech hasn't made sense for VCs until recently because the bubble isn't expected to hit until around 2010 putting nano far outside many VCs acceptable time-to-exit area (for those who don't know, generally VC funds are set up as 10 year limited partnerships with investing being done within the first 3 - 5 years and exits coming before the 10 years are up). Also, nano isn't the traditional model many VCs are used to. Nano is an enabling technology. Essentially, nano is a way to make things better than they already are or enable things that were impossible without it. This means that you would invest in, let's say, a materials company like Nano-Tex or a pharma company like QuantumDot rather than a "nanotech company." In English, Nano needs to be used in convergence with other scientific disciplines.

How did a business guy get into nano you may ask. Well, for one, I am a tech/science geek and proud of it. However, the real answer is that in my senior year of college I did a lot of work with a professor of mine, Dr. John McIntosh, on nanotech with the intent of forming an advisory company (finding funding, strategy, etc.) to small nano upstarts called Nano-Oracle. In fact, if you click on the link you'll see our web shell my friend Rick built that was never populated with real data. Anyhow, John ended up moving to Boise to teach at Boise State while I stayed in Boston which put a halt on things and some big connections didn't pan out so the venture died. However, it left me with a love for all that is nano. With that said, I was recently inspired to continue my nanotech evangelization by Steve Jurvetson's blog where he is always talking nano and the latest edition of Small Times Magazine.

The new Small Times cover story was about nanotech's role in the fight against cancer. Now, I absolutely love the materials end of nano which is already being used (textiles, carbon nanotubes, etc.) and is making things like the space elevator a real possibility (self promotion alert: I wrote a piece in LiftPort's SE book about the SE finances so stay tuned for that). I even have an artists conception of the space elevator hanging on my wall. However, the part about nano that always got me going was the fight against disease.

The first thing that got me excited was work on gold nanoshells being done at Rice by Naomi Halas, PhD and Jennifer West, PhD who have since spun out their innovation into a company called Nanospectra Biosciences. Their patented Nanoshell particles allow for non-invasive medical therapies. The interesting thing about nanoshells is that they can be tuned to absorb or scatter light at desired wavelengths, including where human tissue is relatively transparent. This allows specific cells, cancerous tumors for example, to be targeted. Once the nanoshells reach the tumor they can be heated through infrared light, which isn't harmful to surrounding tissue, eventually killing the cancer cells. Here are the benefits of "nanoshell-based tumor ablation" found on Nanospectra's website.

  • Targeting to specific cells and tissues to avoid damage to surrounding tissue;
  • Superior side effect profile than targeted chemotherapeutic agents or photodynamic therapy;
  • Repeatability because of:
    • no "tissue memory" as in radiation therapy, and
    • biocompatibility and superior side effect profile; and
  • Ability to treat non-spherical tumors, such as glioblastomas, metastases, and inoperable tumors.
Nanospectra is just one of the amazing companies using nanotechnology to do great things. However, VC funding hasn't been easy to come by. As with other nanotech companies, Nanospectra is solely funded by grants as VCs investment horizons haven't meshed with nano. However, this is beginning to change. There are about 700 nano companies in the US with about 75 of them receiving some type of venture capital investment. VC investing in the sector in 2002 and 2003 was robust with about $700mm invested. This investment pace slowed in 2004 due to VCs exit opportunities being called into question by the Nanosys IPO pull out. However, more big names are getting back into the game.

Kleiner Perkins, Draper Fisher Jurvetson and Venrock Associates are leading the way with smaller firms like Global Catalyst Partners and Israeli firm MMT Funds investing in nano. MMT Funds, or Millennium Materials Technologies, is dedicating a lot of their fund to nano investing. They can do this because they are focusing on materials which get to an exit much quicker than bio-nano companies. MMT has actually invested in a company called Power Paper which produces batteries that integrate into paper products. The company is initially targeting the electronic greeting card market, games and other consumer products. Clearly a simplified path to revenue compared to Nanospectra.

Before I close out my initial nanotech column I just want to touch on another hot space for nano innovation, cleantech. Cleantech has been thrown into the spotlight again though the tragedy of Hurricane Katrina and the well known aging of the grid in the US. Small Times did a whole issue on the energy crisis and innovation. It was a great issue and I suggest giving it a read. The major thing that nanotech is enabling today in the space is fuel cell creation. There is one company in particular that is worth a look, Integrated Fuel Cell Technologies (IFCT).

IFCT is currently funded by a small venture capital group out of Massachusetts, not too far from where I write this blog, called Echelon Ventures. I had the pleasure of speaking to some of the GPs at Echelon a while back and I heard great things from them about this company. I am not sure what is public so I will just include the company description from Echelon's website.

Integrated Fuel Cell Technologies, Inc. (IFCT) has created, patented, and successfully tested in prototype, a breakthrough design for a fuel cell. With this design, IFCT will make not only the world's smallest fuel cell but also the first fuel cell design to be mass manufactured at an economically viable price. Potential markets for economically viable fuels cells, which are extraordinarily broad and deep, include the market for portable power, stationary power, and, potentially, automotive.

Small doesn't even begin to describe it. These fuel cells are incredible! They will revolutionize portable power and many other spaces.

Well, that is all for my initial nanotech sermon but I will have more coming in the future so be sure stay tuned (i.e. please subscribe to my feed)! As always, feedback is encouraged and appreciated.

3 Comments:

  • Thanks for a wonderful intro to the world of nano. Your blog was an easy read. Even better, you provided links for further information. Cheers!

    By Blogger Shri, at 10:54 PM  

  • Thank you so much for the kind words. I am happy you enjoyed my article and I hope you'll be a regular reader of my blog. I truly enjoy writing about high tech in a way in which everyone can understand it. Stay tuned for more posts and please tell your friends about The Wannabe VC! Take care.

    By Blogger Eric, at 1:08 PM  

  • Way to go. Nanospectra is a very interesting story indeed.

    By Blogger Steve Jurvetson, at 1:14 PM  

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