About five years ago I helped organize a conference that contained a panel session called “Bridging the Funding Gap”. At the time, this was a matter of some concern. How were innovations in nanotech going to move from government funding at research institutes and universities towards commercial markets?
The answers were not clear at the time, and now while things may be a little clearer they may be less hopeful.
This state of affairs is highlighted in a recent post over at TNTLog “Can the VC Model Handle Emerging Technologies?”. The answer seems to be an unequivocal “no”.
As pointed out in the piece, the Venture Capital model (a 40-year-old model as pointed out in the article) requires some kind of financial exit within seven years of the initial investment. With early-stage companies developing emerging technologies, and in particular nanotech, seven years is just about where things get anywhere near markets.
The landscape today for many of these early-stage nanotech companies is like coming across one carcass of bones after another in the desert. Some of the brightest stars of nanotech five or six years ago have had their IP portfolios sold off for as little as $1,000.
To some extent, the funding gap question has been answered in that large companies are now spending the most money in R&D and innovation in nanotech. In other words, we are more likely to see the cure for cancer, the next breakthrough innovation in electronics, or a viable alternative energy source come from the labs of large industrial company than from a spin-out from a university lab.
But this model certainly does not cover all the possibilities for innovation, and will likely preclude important breakthroughs made outside of it to make it to market.
But the financing model for this type of innovation clearly does not seem to be the VC model. Whatever model is finally used, it is clear that it will need to stay in that investment for a lot longer than seven years.
