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Nanotechnology: Small Science, Big Business

Nanotechnology is a hot sector plagued by a gaping divide between promising research and commercial products. Bridging that commercialization gap is critical to bringing nanotechnology mainstream, according to a panel of experts assembled by the Executive Master's in Technology Management (EMTM) program at the University of Pennsylvania.

The panel, moderated by David Hsu, an assistant professor of management at Wharton, was held October 26. The panel featured experts ranging from those who fund nanotechnology companies to patent experts and entrepreneurs. Nanotechnology is the understanding and control of matter at dimensions of roughly 1 to 100 nanometers, and also includes imaging, measuring, modeling, and manipulating matter at this small scale. It has a broad range of applications that range from sunscreen to drug delivery to energy transmission.

"What strikes me is the diverse range of knowledge — physics, biochemistry and electronics — needed in nanotechnology," said Hsu. "There's a vast array of corporate applications."

However, there are hurdles to making those corporate applications a reality. Anthony Green, Ph.D. vice president of the technology commercialization group, Ben Franklin Technology Partners, and Ben Franklin Director of the Nanotechnology Institute (NTI), summed up the overarching question facing the nanotechnology industry: "How do you get a product out the door?"

It's a tricky question, said Green, whose group specializes in negotiating technology transfer between academic institutions and the private sector. "There are challenges to (transferring technology). Institutions are seen as greedy, overprotective and obstructionist by industry, and industry is seen as stingy, overprotective and obstructionist by the institutions," he quipped.

If these two parties can come together, nanotechnology-based products may become commonplace. For now, the road to commercialization is unclear. "There's a tremendous amount of activity in research, but the commercialization has been limited," said Erli Chen, director of nanotechnology licensing at the Center for Technology Transfer at the University of Pennsylvania and Director of the NTI's NanoCommercialization Group.

The challenges for the commercialization of nanotechnology abound. In some cases, many products need approval from the Federal Drug Administration (FDA) and even the Environmental Protection Agency (EPA). Technology from researchers in academic settings also needs to be transferred to the private sector. Intellectual property needs to be protected. And nanotechnology is a long-term investment that may take years to pay off.

Green's group is funded by the state of Pennsylvania to offer seed funding to grow new companies and technologies. The primary focus is on capital, mentoring and commercializing intellectual property. Indeed, the NTI is a necessary intermediary because the intellectual property transfer process is inefficient in nanotechnology.

Even developing a prototype product based on nanotechnology is difficult. Why? "Frankly, the tools haven't been developed yet to manufacture nanotechnology nor have the tools to analyze these products," said Green. "We're going to have to create new models to figure new ways to get this technology out the door."

For instance, Chen and Cynthia Kuper, president and chief of research at Versilant Nanotechnologies and an adjunct professor at Temple's Fox School of Business, noted that there is no controlled scalable way to manufacture a carbon nanotube on a large scale. Kuper said that mass production of carbon nanotubes isn't scientifically possible yet. As a result, carbon nanotubes will be used in niche applications only.

Building blocks in place

Despite the commercialization challenges facing the various sectors that are using nanotechnology — medical, energy and information technology — there are some solid building blocks in place for future growth. Chen noted that the European Union, Japan and the United States are all investing heavily in nanotechnology as funding has ballooned to $4.68 billion from $430 million in the last decade.

Chen looks at the commercialization gap and sees opportunity. If companies can overcome challenges in product development and clear a bevy of hurdles — one of the biggest ones being the FDA — the rewards can be great. "This is a no-man's land; the technology is immature, the manufacturing incompatible, the market reluctant, and there's high risk and unclear government regulations," acknowledged Chen. "But this no-man's land can be a gold mine."

Chen is most optimistic about nanotechnology's effect on new materials and biomedicine. At first, niche applications such as burn and wound care, dental bonding and sun screen will be common. These applications will expand, said Chen. "In the near future, the FDA will realize there's more potential for new drugs, cell level sensors and probes for early diagnosis and targeted drug delivery."

Kuper agreed and noted that resources for entrepreneurs abound. And Kuper should know — she is a nanotechnology pioneer. In 1999, Kuper was finishing up her PhD at Temple and pitched her research to Richard E. Smalley, Nobel Laureate and founder of carbon nanotechnology at Rice University. She wound up working with Smalley and helped develop some of the nanotechnology building blocks. "This was an historic time when nanotechnology was pioneered into the lay environment," said Kuper.

With the nanotechnology infrastructure in place today, entrepreneurs can take their research and find more willing business partners. "The venture capital community has become much more aware of nanotechnology," said Kuper. "It's not this subset of people delivering tinker toys anymore; we're talking about drug delivery, new semiconductors and memory. You're in a great place at a great time and you have a lot of resources available to you."

A long term investment

Daryl Boudreaux, a partner in NanoHoldings LLC, is one of those resources. Boudreaux's firm invests in nanotechnology companies when they have just a germ of an idea. He outlined the investment landscape for nanotechnology and how patience is critical. "We invest in technologies at an extremely early stage. We know about them before these developments are ever reported to the technology transfer office," he said.

According to Boudreaux, NanoHoldings invests in promising nanotechnologies before there's a management team in place, development work and even market information. "We visit universities and ferret out ideas that have market potential," he said. "We look at a technology to see if it has the legs to be commercial."

Boudreaux said NanoHoldings made its first investment in 2004 and now has 11 companies in its stable. NanoHoldings supplies the cash management resources to launch these startups. The investment focus thus far has been primarily on energy. For instance, one technology from Wake Forest represents a new form of lighting that uses nanotechnology included in a thin polymer film. "That's something we think has a lot of legs," said Boudreaux.

The message to EMTM students: Boudreaux is looking for leaders. "We want a tech team where the leader will not accept no and take a ball and run with it. It's not hard to find these types of people at universities," he said.

Kuper added that researchers and engineers should also promote their big ideas. After all, there may be a business waiting to be developed. "Don't be afraid to pitch your idea," she said, referring to her experience in the early days of nanotechnology. "I don't think we were conscious then of the fact that nanotechnology could be a business. I didn't think about an IPO, taking an applied science and building a business out of it. Today it can be done. I hope you can take what inspires you and match it with management resources."



Panel of Nanotechnology Business Opportunities
Small Science, Big Business

Friday, October 26, 2007, 6pm
Wu and Chen Auditorium
Levine Hall

MODERATOR:
Professor David Hsu
Department of Management, Wharton School

PANELISTS:
Daryl Boudreaux, PhD
Partner, NanoHoldings LLC

Erli Chen, Ph.D.
Director of Nanotechnology Licensing
University of Pennsylvania

Anthony P. Green, Ph.D.
Vice President, Technology Commercialization Group: Life Sciences Ben Franklin Technology Partners of Southeastern Pennsylvania (BFTP/SEP) and Ben Franklin Director of The Nanotechnology Institute— (NTI).

Cynthia Kuper, Ph.D.
President and Chief Scientist
Versilant


Despite the commercialization challenges facing the various sectors that are using nanotechnology — medical, energy and information technology — there are some solid building blocks in place for future growth.

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