Nanosys is working on a lot of potential applications that could find demand once they reach the market: fuel cells for laptops, memory for MP3 players, low-cost solar cells, etc. One of the company's founders, Larry Bock, has a stellar track record of investing in or founding biotech startups such as Ariad Pharmaceuticals, Athena Neurosciences and Neurocrine Biosciences.

"Many of the initial investors got sucked into this as a result of Larry Bock's success in the biotech world and believed that this could be replicated in nanotech," says Harper. "So four years in, they are being asked to pony up again in order to keep the company afloat long enough for them to hit pay dirt somewhere"

Charles Harris, CEO of venture firm Harris and Harris ( TINY), which has participated in multiple rounds of private funding for Nanosys, says the nanotech issue is beside the point. First off, investors still labor under the misperception that nanotech is an industry rather than a field of innovation that will affect many industries. Also, Wall Street has been lukewarm toward venture-backed IPOs of all types in the past few years.

"When the Nanosys IPO was pulled, people attributed it to nanotech per se," says Harris, who adds he saw a silver lining in having Nanosys remain private. "It gave us an opportunity to put more money into the company."

What Nanosys' latest round of funding, with a broader array of private funds involved, suggests is that nanotech investment appears to be slowly attracting the interest of private investors. Whether you put the blame on Wall Street or Nanosys, the public markets remain lukewarm to nanotech.

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