Entrepreneurs in Nanoscience

Entrepreneurship is the origination of a new business, especially in response to a discovered opportunity, such as when a new market opens and the business is founded in order to take advantage of it. Though entrepreneurship itself can be a solo undertaking as simple as opening a lemonade stand on a hot day, in a field like nanoscience it is more likely to require large amounts of starting capital—that, in turn, if the entrepreneur is not cash-rich or able to secure significant-sized loans, tends to involve the participation of venture capital funds or “angel” investors.

Venture capital funds pool the investment funds of a number of high-level investors, typically institutional investors such as pension funds. They are managed by venture capitalists who are experts at the business performance of one sector of industry or another—the more specialized the better—so that they can evaluate the prospects of a new business in that industry and identify warning signs that might be nonsensical to the layman. Venture capitalists may often be former executives from the industry they invest in.

Angel investors are a common source of funding for tech startups, with software, healthcare and medical equipment, and biotech taking the largest slices of the angel pie, the rest spread across the tech sector. While angel investors may be as well-versed in their chosen industry as venture capitalists are, they invest their own money rather than that of a managed fund. Angel investors are more likely—and willing—to invest in smaller companies than venture capitalists, who typically avoid investments under seven figures. Professional angel investors tend to demand a very specific exit strategy for their investment, usually involving a planned initial public offering (IPO) for the company years down the line, at [Page 199]which point the angel will take his cut and part ways. The risk is high—many companies will fail—and so a high rate of return on investment is usually demanded, essentially so that, when considered across the angel investor population, the successful companies are subsidizing the investments in failed ones.

Various clearinghouses exist to facilitate matching up scientists and researchers who have nanotechnology-based proposals or projects that they feel have commercial potential with funding sources. For instance, the Website Nanotechnology Now listed over 100 funding sources as of June 2009 for nanotechnology businesses. Some firms specialize in a small range of services: for example, Molecular Manufacturing Enterprises (MMEI) is a privately held seed capital corporation that provides funding at the early stages of product development in molecular nanotechnology. For instance, MMEI might provide funding to assist a scientist in developing a laboratory-bench model into a working prototype that could be shown to venture capital firms, possibly providing funding to take the product to market. They also supply advice, contacts, and support services to people working on projects that, in the judgment of MMEI, have the potential to advance the science of molecular nanotechnology.

In contrast, Draper Fisher Jurvetson is a venture capital firm with offices in Menlo Park, California, Shanghai, China, and Bangalore, India, and has invested in over 600 companies since its founding in 1986. Draper has backed many projects in different industries: among its notable successes are Hotmail, Skype, and Digidesign. Current nanotechnology projects funded by Draper, in conjunction with various companies, include a biosensor device for asthma management with Apieron, micro- and nanoscale carbon structures for microbatteries and fuel cells with Carbon Micro Battery, a three-dimensional atomic microscope for the semiconductor industry with Imago Scientific, and portable ultra-short pulse laser systems with Raydiance.

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