Is nanotechnology -- once richly fertilized by hype, then left for dead by investors after it failed to deliver a single hot IPO -- finally starting to deliver on its promise?
A recent report from U.K.-based research firm
suggests that it just might be. And if so, it will have little to do with all that investment and hype a few years back.
First, some perspective: Back in the 1990s, research firm Gartner
outlined the five stages of hype: Technology trigger, peak of inflated expectations, trough of disillusionment, slope of enlightenment, and plateau of productivity.
If you've watched the Internet develop for the last 15 years or so, you might peg it in stage five, and one could say so-called cleantech is riding out stage two.
And nanotech? On Cientifica's
, President Tim Harper, who has long mixed keen insight with a sharp tongue, declared last week that long after many investors have given up on a molecular-level killer-app, we're at "the point at which nanotech moves out of the 'Trough of Disillusionment' and into the 'Slope of Enlightment.'"
"We always knew that it would get there," he added. "One just needed a little patience to see it come to fruition."
To back up that somewhat contrarian assertion, Cientifica has released a 1,000-word report, an update to one last published five years ago. In it, Cientifica argues that the failure of IPOs such as
, and the string of disappointments among companies that touted their nanotech promise, are paradoxically signs that market opportunities for nanotechnology are finally starting to emerge.
These big honking reports usually go unnoticed unless there are round numbers for readers to grab onto, and Cientifica has them: In 2010, companies -- led by the semiconductor, chemical and drug industries -- will be spending 83% of the estimated $50 billion that will be invested in nanotech. Last year, private investment made up 66% of the $19 billion invested. (They were roughly equal in 2003).
What will that money yield? Much of the R&D has until now been focused on the chemical industry, developing nanomaterials into an $80 billion business supplying manufacturers of higher-level consumer products. Nanomaterials should see cumulative annual growth between 20% and 30% for several years,Cientifica estimates.
After that, growth should come from nano-enabled products. By 2012, the market for such higher-value goods made possible by nanotechnology will reach $263 billion. And three years later, it will grow to $1.5 trillion. The report says much of this growth should come from health care and pharmaceuticals, as well as the odd surprise hit from a niche industry.
"Anyone who bails out of nanotech now is really missing the point," the report argues. "This is where nanotech starts to get interesting, and a lot of it comes down to supply chain maturity. After ten years and fifty billion dollars, we finally understand enough about the nanoscience tostart building products."
Assuming that the beneficiaries of this growth are somewhat proportionate to the money that governments and companies are investng in it, the U.S. should see a good share, but maybe not as much as the E.U., where investment has been a little more aggressive. China and India are also outside candidates to become major players.
Asked for an investor takeaway from his lengthy report, Harper shot back: "The key finding is that nanotech is gaining traction DESPITE the attentions of VC's and pundits," he responded. (His caps-lock key, not mine.)
Harper says venture capitalits have poured "almost a billion dollars over the last seven years" into nanotech. But the problem wasn't so much the companies invested in, but the limiting 7-year perspective that many venture funds have. Emerging technologies like nanotech can take 10 or 15 years to bear fruit.
Those who have been invested in nanotechnology for some time might not like having to wait a decade or more for returns. But to investors who are interested less in hype than in the long-term potential of nanotech to change a number of different industries, this report could be pointing to very good news for the patient.