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From Small Acorns: Spotting Emerging Technologies Before the Pros Do

James Brookes-Avey

OK, so perhaps you didn't have a chance to schmooze with Kevin Hickey, CEO of Internet real-estate broker Homebid.com, after his recent speech at a venture capitalist conference. And you didn't get a crash course in data storage from high-ranking officials at EMC (EMC Quote), like I did at yet another rubber-chicken luncheon of financial analysts.

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Case Study: Cree Investors See the Light

Absolutely!

Thanks to the Internet, broadcast and cable TV, almost anyone today can become a financier extraordinaire. Today's investors have unprecedented access to the ever-toiling throngs of high-tech entrepreneurs through both free, and nearly-free media.

The key is knowing where to look.

Viewers of the "Inventing the Future" special a few seasons ago on the PBS show "Scientific American Frontiers" caught an early glance of wearable computers being designed at the MIT Media Laboratory. Following that thread might have led you to Fairfax, Va.-based Xybernaut (XYBR Quote), a stock that has soared in recent months to 15 from less than 2.

Readers of the New England Journal of Medicine foresaw the tremendous potential of HeartStream's lifesaving automatic external defibrillators, which may one day become as common as fire extinguishers. (Once Nasdaq-traded, HeartStream is now part of Agilent Technologies (A Quote).)

In 1997, ABC News profiled Princeton, N.J.-based start-up Orchid Biocomputer's efforts to dramatically increase the pace of genotyping single nucleotide polymorphisms (SNPs) through the use of its proprietary microfluidic-array chips. Such "snips-on-chips" technologies are widely viewed as the key to realizing the potential of the Human Genome Project. Only last month, Orchid completed the largest ever self-managed private placement by a private company in the biotech field, raising a staggering $72 million. Watch for a possible IPO.

Long powering NASA's fleet of orbiting space shuttles are exotic hydrogen fuel cells. Canada's Ballard Power Systems (BLDP Quote) is taking huge strides toward bringing such clean propulsion systems to the family car (perhaps as early as 2003) by perfecting an economical proton-exchange membrane (or PEM), the hydrogen fuel cell's essential component.

First developed in 1839 by Sir William Grove, and long considered impractical and prohibitively expensive, Geoff Ballard's tortuous and storied drive to get funding, reduce unit costs and increase wattage is the stuff of heroic perseverance. His story was the subject of a book, Powering the Future: The Ballard Fuel Cell and the Race to Change the World, by Tom Koppel (John Wiley & Sons). As if to confirm that PEM fuel cells are finally coming, Plug Power (PLUG Quote) of Latham, N.Y., which went public last October, has electrified investors since.

So where else should investors keep an inquisitive eye, besides, of course, TheStreet.com? Cast your gaze toward The Discovery Channel, ABC News' regular "Technology on the Cutting Edge" features, NASA's (www.nasa.gov) Technology Transfer Program, Investors Business Daily's "New America" page, Ziff-Davis' Inter@ctive Week magazine, MIT's Technology Review, Red Herring.com's VCs & Startups column, as well as Fast Company, Upside and Business 2.0 magazines. Likewise, check out BioWorld.com (www.bioworld.com), the Materials Research Science and Engineering Centers (www.mrsec.org) and Sandia National Labs' (www.sandia.gov ) work on nanotechnology, buckyballs, nanotubes and micromachinery. These brilliant devices (still without apparent use) remind you of the birth of lasers, long before they became indispensable. And who hasn't dreamed of participating in the granddaddy of all hi-tech sleuthing activities: wandering the aisles of the annual Comdex computer trade show in search of a newly crowded booth?

But finding a great emerging technology is only the first step; getting in and riding it to hefty profits is another. Part 2 of this report, Case Study: Cree Investors See the Light, tracks an early investment in Cree (CREE Quote), a pioneer in the commercial use of silicon carbide semiconductor wafers and devices.