As both a science and application, nanotechnology is on the verge of creating a global revolution for many industries. Large amounts of funding are needed to jump-start the technology from laboratory to commercialisation – money from federal or state sources, grants and venture capital. Consequently, despite the hype, true nanotech companies do not yet abound.



“It will take time and won’t change everything overnight. But, like the internet, it will creep into our world,” says Dr Eijkel Kees, technical commercial director of Mesa. The Dutch institute trains graduate and PhD students and conducts nanotech research (among other sciences) at the University of Twente in the Netherlands.


Nanotechnology is a science that takes its name from the nanometre (one-billionth of a metre) and promises to deliver enormous improvements in areas from medicine, manufacturing and high-performance materials to information technology, energy and environmental uses. Nano, a Greek word meaning dwarf, is the little engine that could boost sophisticated economies into a more solid global, competitive position.

Government funding

Governments worldwide are beginning to see the potential of nanotechnology. In December, US President George W. Bush signed a bill into law that authorises $3.7bn to be spent during the next four years on nanotech research initiatives. Japan budgeted $875m in government funds this year to promote the technology. The UK government will spend $160m over six years on nanotechnology and about $480m will be pumped into the industry from private and other sources for applied research and development (R&D) of micro and nanotech facilities. Other countries on the bandwagon include China, South Korea, Canada, Germany, Denmark, Norway, Sweden, Switzerland, France, Belgium and the Netherlands.


Although many nanotechnology applications are still in the laboratories, commercialisation is under way. The technology has already provided a turnaround for US fabrics manufacturer Burlington Industries, based in Greensboro, North Carolina.


Burlington filed for bankruptcy in November 2001 with nearly $1bn in debt. Today it has strengthened its market position thanks to a partnership with Nano-Tex, LLC, a US R&D start-up in Emeryville, California, which is involved in advanced materials, including polymer chemistry applications. Together, they are creating unique products, such as water-repellent and wrinkle-resistant fabrics and silks. Consequently, Burlington fabrics are now being manufactured for a host of well-known brands.


“I’m obsessed that we in the textile industry must increase the technology content of our product,” says Wilbur Ross, who recently acquired Burlington. “In most other countries, textile manufacturers are focused on low-cost labour, not technology. Our focus is on specialty, value-added products that stand out in a crowded market place.”

Private investment

Such developments create a lot of media hype. And, in some countries, the frenzy is being fed by nanotech being pumped with private funding from investors that are anxious to ride the next high tech wave.


US company Nanosys, based in a Palo Alto, California, and involved in nanotech-

enabled systems, hopes to capitalise on investors’ optimism with an initial public offering (IPO) stock release this year. Stock analysts fear, however, that if the offering becomes too overheated, nanotech stocks could burst prematurely, like the industry did in the late 1990s, and the industry could lose a much needed investment source.


Nanosys has already raised $56m from private investors in addition to netting $15m in government contracts and grants at the beginning of the millennium. Nanosys CEO Lawrence Bock attributes this success, in part, to the company’s Silicon Valley location. Although the company was founded in Boston, Mr Bock chose to grow it in the new location simply because California offered the right ingredients.


“We believe the San Francisco Bay area is the only place for a nanotech company due to its academic prominence, available financial capital and talent, and established infrastructure capable of supporting start-up companies,” he says.


Other locations that provide investment include London, where 3i, a world leader in private equity and venture capital, has been hinting that it will put more money into nanotech companies. The investment house is active across all stages of funding from early-stage venture capital to growth capital and buyouts.


In June, 3i joined seed investors in leading the first round of financing for Nanostellar Inc, a firm founded in 2003 and based in Menlo Park, California. In that round, $3m was raised to commercialise the company’s proprietary nano-composite materials used in clean energy applications. Overall, 3i invests £1.5bn ($2.7bn) a year in what it dubs “some of the most exciting and ambitious companies in the world”.

Global competition

The US and Japan are leading the race to develop and commercialise nanotechnology. In Japan, the industry has been identified as one of four strategic pillars for growth in its science and technology sector. The country’s universities play a pivotal role in connecting nanotech research with large corporations. Kyoto University, for example, has forged links with Rohm, Pioneer, Hitachi and Mitsubishi Chemicals to develop next generation nano-materials and devices. Projects are administered by the university’s International Innovation Centre and participating companies have access to both the research infrastructure and expertise of various departments.


In the US, the government and institutions such as the National Science Foundation (NSF) are pumping enormous amounts of money into university research. States identified as having the most nanotech thrust are California, Massachusetts, New Mexico, Arizona, Texas, Maryland, New York, Illinois, Michigan and Pennsylvania. According to Small Times magazine, California provides the best environment for nanotechnology for four reasons: research, industry, venture capital and innovation.

US centres

Hewlett-Packard (HP) clearly benefits from its Palo Alto location, where it has been operating since 1938. In 1995, it formed its Quantum Science Research group to focus on advancing its thermal inkjet capabilities via nanotechnology. “HP is also developing molecular computing that performs like the transistors, diodes, capacitors and other key components in microcircuits,” says Dave Berman, HP Labs spokesman.


Collaboration between universities and government is well established in California. HP, Boeing, DuPont, Hughes Research, Motorola, NanoSys, Northrop Grumman, Rockwell Scientific, Raytheon and TRW are sharing R&D efforts with three University of California institutions: UCLA in Los Angeles, UCR in Riverside and UCSB in Santa Barbara. All are flooded with government research dollars.


UCLA is home to two US federal organisations that have provided funding to establish the Center for Nanoscience Innovation for Defense: the Defense Advanced Research Project Agency and the Defense MicroElectronics Activity. The centre is one of seven interdisciplinary centres that have been established at UCLA to strengthen the bridge between the laboratory and commercialisation.


The California NanoSystems Institute was established at UCLA and UCSB as one of four California Institutes for Science and Innovation to generate ideas, discoveries and the talent that is expected to fuel innovation in nanosystems thanks to $100m from the state and $138m from private industry, foundations and federal grants. The institute’s corporate partners include HP, Intel, Lockheed Martin, Sony and Mitsubishi.

Rapid growth

Nanoscale technology R&D and economic development are also growing rapidly in Massachusetts. By February 2004, about 100 companies were using or developing nanoscale technologies there. Kendall Square/ Cambridge with its Harvard University and Massachusetts Institute of Technology (MIT) can largely take credit for this. Defence laboratories, such as Draper Laboratory and the Lincoln Laboratory at MIT, have pioneered small tech innovations in guidance and control systems, and military surveillance.


In 2000, MIT was chosen to host the US Army’s University Affiliated Research Center for its Institute for Soldier Nanotechnologies. Competition for the centre was keen between a number of universities across the US. ISN offers a five-year, $50m programme, in which MIT receives $10m annually for research.


The Massachusetts Nanotechnology Initiative and the state’s venture capital community are investing in companies that are using or developing nanoscale technologies. In 2003, such firms attracted more than $120m, second only to California’s $480m.

R&D catalysts

New Mexico’s Sandia National Laboratories, Los Alamos National Laboratories, University of New Mexico, New Mexico Tech and New Mexico State University are serving as catalysts for nanotech R&D and commercialisation. New facilities are being constructed at Sandia. When the $462.5m Microsystems and Engineering Sciences Applications (MESA) facility is finished in 2008, it will be the biggest, most advanced micro-technology laboratory in the US.


Complementing MESA will be Sandia’s $78.5m Center for Integrated Nanotechnologies, which is intended to be one of the most advanced nanotech centres in the US. It is one of five national nanotech labs that are being built by the US Department of Energy.


“I think these facilities are going to be great for us,” says Steve Walsh, a professor at the University of New Mexico Anderson Schools of Management. “They will attract people to New Mexico from all over the world. They support the lab’s mission of homeland security. They should create technology spin-off companies, new jobs and will put us deep in on technologies that are going to be ubiquitous – they will be incorporated in everything we use.”


Next door, the Arizona State University (ASU) has partnered with Motorola Inc and General Dynamics to create a $1.5m Applied NanoBioscience Center. The centre is staffed by scientists and engineers, and flush with donated equipment and facilities from Motorola.


“The combination of this centre’s strength in nano and micro systems for biotech application, in combination with ASU’s strengths in biomolecular sensing, genomics and biomedical applications, is anticipated to create an area where ASU can compete on the national and international level,” says ASU president Michael Crow.


Rice University in Houston, Texas, is also making inroads into nanotechnology due to a research agreement between its Center for Biological and Environmental Nanotechnology (CBEN) and IBM. The centre houses a supercomputer powerful enough to decipher the quantum phenomena of carbon nanotubes and other nanomaterials.


University at Albany — State University of New York (SUNY) fosters Albany NanoTech, an umbrella group for high-tech initiatives. The group is constructing two 300mm wafer facilities: NanoFab 1, a $35m facility with a 20,000sqft clean room; and NanoFab 2, an 85mm centre with a 35,000 sqft clean room. And the College of Nanoscale Science and Engineering, also a first, will open there later this year offering doctoral and masters degrees.


Some nanotech companies are choosing locations that are less prominent in the nanotech field but that best suit their needs and business models. Jayesh Doshi located his company, eSpin Technologies, in Chattanooga, in the US state of Tennessee. “The people here are flexible,” Dr Doshi says. “I also enjoy Chattanooga’s quality of life and the cost of living is fair.”


eSpin manufactures high-speed polymeric nanofibre technology that makes it possible to electrospin fibre, thereby reducing production costs and increasing output of material. The technology has implications for the filtration, aerospace, structural composites, healthcare, energy storage and cosmetics industries. A $2m federal grant from the National Institute of Standards and Technology’s Advanced Technology Program (ATP) helped to jump-start the company.


Dr Doshi considered other locations but says they “did not offer the same cost benefits as Chattanooga. It is imperative that we keep our costs low because we compete with Korea, China and Japan”.

European arena

While Europe has embraced nanotechnology, much remains as classic research in university laboratories with little support for commercialisation. Germany and Switzerland are leading the way, closely followed by the UK.


The impetus in Germany comes from federal subsidies that have increased threefold in the past six years to E100m ($125m).


The area around Dresden, where a group of Germany’s nanotechnology industries are concentrated, is getting a boost as “Silicon Saxony”. Up to 20,000 high tech jobs are expected to be created there in the next few years due, in part, to plans calling for the creation of a nanotech research centre. California company Advanced Micro Devices (AMD) and German semiconductor manufacturer Infineon Technologies Inc, based in Munich, are two major players in the proposed centre.


The German region is drawing on relations with New York state to negotiate a co-operative partnership between the University of Dresden and the University at Albany’s College of Nanoscale Sciences and Engineering. The partnership would involve sharing facilities and staff, and collaborating on research – a joint effort that would save hundreds of millions of dollars. Infineon is already investing $25m in R&D at Albany NanoTech and AMD plans to build a $2.4bn plant in the German city of Dresden.


The recently opened Center for Nanophotonics at the Technical University of Berlin offers another venue for nanotech research. The centre is funded with E5.4m by the European Fund for Research Excellence, the German federal ministry of research and the Technical University of Berlin. It offers a 480m2 clean room, which will boost opto-electronics and semiconductor nanotechnology research.


Switzerland offers unique opportunities for collaboration between government, universities and industry. This is seen particularly between the IBM Research Laboratories in Ruschlikon and the NANO-Center Basel at the University of Basel. As a result, IBM research resulted in the earth-shattering development of new microscopes through which individual atoms and molecules can be seen.


In Neuchâtel, CSEM (the Swiss Center for Electronics and Microtechnology, Inc) is active in micro/nanotechnology, microelectronics, systems engineering, information and communication technologies. A privately held, knowledge-based company, CSEM anticipates and fulfils the needs of industrial partners. And in Zurich, Nanodimension operates as a venture capital and investment broker for early-stage venture capital support.


In England, Oxford and Cambridge lead the way in developing Britain’s nanotech industry, with the universities of Leeds, Sheffield and Cranfield trailing behind. In London, the £13.5m London Centre for Nanotechnology has been established at the Imperial College London. According to the Institute of Nanotechnology, UK universities spin out more than 90% of the nation’s nanotech companies. One success story is Oxonica, which grew out of research at the University of Oxford. It designs functional nanomaterials, such as nanocatalyst fuel additives to improve fuel economy and reduce emissions in diesel engines. BASF has shown great interest in the product.

Slow uptake

Although large multinational corporations have been slow to adopt nanotechnology in the UK, Johnson Matthey, Pfizer and Unilever are leading the way. Corporate executives at the firms say that if their companies do not invest in the technology, they will lose competitive share to companies in the US, Japan and Germany. Still, the UK pales in comparison to nanotech R&D efforts in Germany and Switzerland. Racked with bureaucracy, the effort toward commercialisation at the university level is also slow.


That was what frustrated Mark Barry, managing director of Q Chip in Cardiff, Wales, while working with the University of Cardiff to foster his fledgling company from incubation to reality. In July, however, he announced that he had raised £500,000 from London venture capitalists Alchemy Partners and E-Synergy, a financial institution that talent-spots firms with exciting growth prospects.


“Prior to this, we did get a SMART [Small Firms Merit] award from the Welsh Development Agency to keep us alive,” says Mr Barry. The awards are used to assist new product and process development. Q Chip has since obtained its first viable customer – the result of exhibiting at BIO-2004 in San Francisco.


Although Mr Barry has not found comparable support in Wales, he prefers his Cardiff location. “Here I can find people with like skill sets,” he says. More important, the University of Cardiff employs David Barrow, professor of Microsystems Technology and director of the Laboratory for Applied Microsystems at Cardiff University School of Engineering, whose work led to Q Chip.


Q Chip’s technology uses tiny capillaries etched in wafers to create micro and nan particles that are capable of delivering predictable applications for the food, pharmaceutical, cosmetic and other industries.


In the Netherlands, nanotechnology is largely supported by NanoNed, a nanotech network of eight knowledge institutes – the Universities of Twente, Delft, Groningen, Eindhoven, Nijmegen, Wageningen and Amsterdam, plus the Dutch Organisation for Applied Research – and Philips Electronics. The network brings together the nanotechnology and enabling technology strengths of the Dutch industrial and scientific knowledge infrastructure.


“NanoNed may be middle sized,” says Mesa’s Dr Kees. “But within this community, we have created a programme with one central board that represents the most important players. Consequently, we have been able to create a lot of cohesiveness with 11 flagship programmes.”


The Dutch government supports nanotechnology with E250m to be spent within five years.


As more nations commit large amounts of funding to develop nanotechnology, governments will stimulate competition for industries. But, ultimately, the key to success lies in the commercialisation of new applications. Only through commercialisation will nanotechnology have an impact on economic development.