Large chemical and materials companies target small nanotechnology firms for venture investing, collaborations, and product innovations
September 1, 2003
Volume 81, Number 35
CENEAR 81 31 p. 15-22
ANN M. THAYER, C&EN HOUSTON
Good things come in small packages. the unique properties of nanomaterials and structures on the nanometer scale have sparked the attention of materials developers. Incremental shifts in product performance using these materials--for example, as fillers in plastics, as coatings on surfaces, and as UV-protectants in cosmetics--are already occurring. The technology holds more promise for the future, though, and is expected to bring more disruptive changes to both products and markets.
This is because nanotechnology could pervade almost any industry--including medicine, plastics, energy, electronics, and aerospace. However, pundits profess that nanotechnology is simply an enabling technology, bringing change to and allowing advances in many applications. Market estimates for "nanoproducts" other than nanomaterials are meaningless, they say, and there will be no "nanotechnology industry," but only others employing the technology.
SUPERHYDROPHOBIA BASF's "Lotus Spray"--using principles involving surface contact and adhesion discovered in the leaves of the lotus plant, as well as a combination of nanoparticles and very hydrophobic polymers--makes a wood surface such as that shown here extremely water-repellent and self-cleaning.
"In 10 to 15 years, or maybe even sooner, we won't be talking as much about nanotechnology" suggests Tim E. Harper, chief executive officer of CMP Científica, a nanotechnology business information and consulting firm. "We'll just be talking about what nanotechnology has enabled, whether that's drugs, chemicals, or materials. On the other hand, we'll still be doing nanoscience in universities."
Advancing nanoscience from the laboratory into a technology suitable for product applications has been the goal of many small start-up companies. Moving nanomaterials into products and the commercial arena is now the objective of major chemical and materials firms. And they are taking at least two tacks: through internal programs and through investments in small technology companies to find materials, processes, and applications.
To assist in the evaluation of nanomaterials development issues, the U.S. National Nanotechnology Initiative approached the Chemical Industry Vision 2020 Technology Partnership, a seven-year-old coalition of major chemical companies and professional organizations that brings together industry, academia, and government on collaborative R&D. Companies leading the nanotech assessment include Air Products & Chemicals, Dow Chemical, DuPont, Rohm and Haas, General Electric, and Praxair.
"The chemical industry may be the only industry with R&D capabilities and expertise to commercialize nanotechnology advances," the Vision 2020 group states on its website. It also notes that chemicals and electronics are the two industries with the most to gain from guiding nanotech R&D funding. Vision 2020 says it is working to improve communication with nanotech funding agencies to make sure they are focusing on areas relevant to the chemical industry.
The group has published preliminary results of an October 2002 workshop and expects a final report to come out shortly, says Vision 2020 Chairman Jack Solomon, Praxair's director of technology assessment. The report, with the working title "Chemical Industry R&D Roadmap for Nanomaterials by Design: From Fundamentals to Function," lays out a research strategy and R&D priorities for developing, using, and making nanomaterials.
"Much of the funding to date has been at the discovery level," Solomon explains, "and while that needs to be continued, support needs to be directed at learning how to build robust manufacturing processes." The report will recommend expanding the fundamental understanding of nanoscale structures and properties as it relates to creating products and manufacturing processes. Other areas of focus include simulation, modeling, standards, and informatics needs; health and environmental concerns; analytical tools; and collaborative and integrative approaches.
FOR MANY chemical companies, there's already old and new nanotechnology. While the distinction is not always used precisely, old nanotechnology usually describes nanoscale materials--such as carbon black, fumed silica, and titanium dioxide--produced for decades but getting the "nano" designer label only recently. New nanotechnology typically encompasses novel material structures, such as carbon nanotubes and quantum dots, with unprecedented properties.
Major chemical firms are very much aware of what is happening in the nanotech field, but most say they are still trying to figure out where nanotechnology and nanomaterials fit into their products and existing businesses. While trying to decide their strategy, companies are beginning to develop their own technical expertise or to tap into it externally.
"I don't detect anything but the most seriousness of purpose on the part of major corporations exploring nanotechnology," says Charles E. Harris, CEO of the investment firm Harris & Harris. "They have a very long-term point of view, and certainly there's no hype.
"If they dominate existing markets, the first thing they are thinking about is not being threatened or blindsided by some disruptive technology," he continues. "So they are concerned about defending their established market shares as well as thinking creatively about new products."
The highest value applications are by definition those in which nanotechnology offers significant improvements or the possibility to make products that couldn't be made before. But it's dangerous to get caught up in "nanotechnology just for nanotechnology's sake," warns Jeffrey T. DePinto, business development manager at Air Products.
"It's important to focus on the real problem in the marketplace and how you can solve it," he explains. "Nanotechnology may only be one way among competing technologies to address the problem." In addition, nanomaterials may suffer from an unfavorable cost/performance ratio, DePinto and others suggest, but progress toward higher volume manufacturing may resolve this issue.
"Finding the right technology-market match is the most challenging issue, since nanotechnology is an enabling technology and not of value itself."
DePinto is responsible for seeing whether nanotechnology can be leveraged across Air Products' businesses or potentially create new ones. While he works on the commercial side, the company has programs in both fundamental and applied research as well.
In early 2001, Air Products and DuPont set up DuPont Air Products NanoMaterials, a joint venture selling colloidal silica-based slurries for semiconductor manufacturing. Similarly, Rodel, part of Rohm and Haas's electronics chemicals unit, is working with Nanophase Technologies to develop and market slurries.
Air Products signed a development and equity investment agreement with Nanotechnologies Inc. in June. The small firm's metal and metal oxide nanoparticle production process is scalable, economical, and has great potential value for high-growth markets targeted by Air Products' performance materials division, DePinto says.
This summer, Air Products became a strategic partner in Inverness Capital Partners. It put $6 million into the private equity fund that provides growth capital to companies with proprietary manufacturing processes in the industrial and advanced materials sectors. Air Products was already a strategic partner in the corporate-backed investment firm NGEN Partners, which has invested in nearly a dozen small companies, about 75% of which use nanotechnology.
Air Products' actions reflect a recent uptick in venture investing by major chemical companies that frequently target nanotech start-ups. "The major firms are not outsourcing R&D but instead bringing in an external source of creativity," Científica's Harper comments. "Once they tap into the ideas and the intellectual property, they then have the corporate structure and know-how to turn a great bit of technology into a product."
DSM has used investments in venture-capital funds as a technology scouting tool since the early 1990s, says Robert Kirschbaum, vice president for innovation in DSM's Venturing & Business Development (DV&BD) group. To expand its reach and perspective, DSM combined its investing and new business development activities into a single unit in March 2001. A team of about 20 employees seeks opportunities in the life sciences and performance materials inside DSM and through direct and indirect outside investments.
"However, the goal is always the same--value creation," Kirschbaum emphasizes. "What differs is the ratio of risk-to-reward managed as a function of the fit with DSM's core competencies." For example, internal R&D projects are closely tied to the company's existing capabilities. For DSM, as the sole investor, these projects afford the highest risk but can yield the greatest reward, namely proprietary ownership.
VENTURE INVESTMENTS can be more exploratory because they put less money at risk, but they provide commensurately smaller rewards. Direct venture-capital investments involve equity stakes of 5 to 30%, Kirschbaum explains. DSM also participates in five venture funds, including NGEN, Ampersand Ventures, and Millennium Materials Technologies Fund. Through these indirect channels, DSM never gains more than a 2 or 3% share in a small firm.
Venture Firm NGEN Banks On Science, Business Expertise
Careful decision-making leads to good investments and successful businesses, smart venture investors believe. Consequently, NGEN Partners--a corporately backed venture-capital fund focusing exclusively on materials science--has pulled together a team with impressive financial, scientific, and business acumen. The two-and-a-half-year-old firm has already put a substantial portion of the $70 million it has to spend into small nanotechnology companies.
Corporate backers include major materials makers Air Products & Chemicals, BASF, Bayer, DSM, and DuPont. And rather than merely having prominent scientists--including Nobel Laureate Alan J. Heeger--as advisers, NGEN has made them active venture partners. The team is rounded out with others who have venture investment and small company management experience, and staff on loan from the major company partners.
"People tend to forget that you need a lot of expertise to evaluate these kinds of investments," says Peter S. H. Grubstein, managing partner and one of NGEN's founders. "Just having an M.B.A. doesn't really do it." The interdisciplinary team actively collaborates on weekly reviews of NGEN's existing portfolio and evaluations of potential new investments.
Companies in the portfolio all focus on "extreme technology, whether or not it's nanotechnology," Grubstein comments. "It's what they are doing on a competitive basis that's different from a technology perspective." NGEN's collective expertise, he says, allows it to understand when something is simply a process enhancement, which won't make money, and when it's a disruptive technology that provides a real market solution.
NGEN focuses on five overlapping areas: polymers and organics, including active coatings and gene chips; ceramics, displays, and electronics, involving electrical, optical, and magnetic materials; energy and environmental, such as catalysts and sensors; infrastructure and telecommunications, ranging from photonics, informatics, high-throughput experimentation to manufacturing systems; and nanotechnology, covering molecular electronics, drug delivery, coatings, and cosmetics.
Agile Materials & Technologies
Grubstein and his partner--Anthony K. Cheetham, director of the materials research laboratory at the University of California, Santa Barbara--started NGEN to fill a gap they saw in the marketplace for materials investing. At the height of the dot-com frenzy, it became obvious that investors were looking to achieve billion-dollar market caps within a year and were leaving most of the materials industry untapped.
"There had been a fair amount of materials venture investing in the 1980s, but almost nothing subsequently," Grubstein says. The problem has been huge time-to-market issues. But cultivating the interest and involvement of corporate partners can help overcome them.
"It's not a lack of good research; it's misguided development," Grubstein explains. "If a small company can start development with someone who says, 'I'm interested in using your technology, and I want to take this product to market,' there will be much better use of development time.
"So we believed there had to be a way to commercialize science much, much faster and an alternative strategy to traditional venture-capital investing," Grubstein says. To achieve this, NGEN focuses on creating wholly functioning business units. "More than just being independent companies, we want to be sure they are addressing large and growing market niches where there's already demand."
NGEN also creates strategic links for its portfolio companies and its partners' R&D and business operations. It invests predominantly in companies that are ready to work with others and need help to grow commercially, rather than early start-ups. As a result, most investments involve not only the fund's money but often a direct investment and collaborative alliance by one or more of the corporate partners, along with continuing networking, technical, and business input.
Grubstein says NGEN hopes to bring its corporate partners intellectual property, know-how, product developments, and processes, while the partners bring brand, manufacturing, distribution, and markets to the small firms. For NGEN, these linkages can lay the groundwork for its eventual exit from an investment, because its corporate partners are likely acquirers of the small technology firms.
With nearly a dozen companies already in its portfolio, NGEN plans to raise more capital next year and have a larger fund to invest.
The rewards can be simply financial, meaning DSM might sell its stake in a business, or technology access or an acquisition could be involved. Between 1991 and 2001, DSM spent about $40 million on new business development and venture investments. It plans to triple that and invest nearly $120 million between 2001 and 2006. "The target is to create a value of about $300 million in five years from that $120 million," Kirschbaum predicts. "After that, DV&BD should be self-supporting."
DSM began its transformation into a life sciences and performance materials company in 2000. With this changing portfolio, Kirschbaum says it is very difficult to envisage clearly what the company will look like in five years. So venture investing allows DSM to scout in any direction where it thinks it might grow or where its competencies discriminate it from venture-capital funds, he adds.
Today, nanotechnology, biomaterials, and electronic chemicals and materials are among DV&BD's focus areas and account for about half its investment portfolio. It's made direct investments in nanotech firms Optiva, which makes highly ordered thin-crystal films for displays, and InMat, a developer of nanoclay barrier coatings. DSM also has an R&D alliance with Carbon Nanotechnologies to explore functionalized nanotubes for boosting polymer performance.
A corporate investor's level of involvement with a small company depends on the fit between the partners and the needs of the small company. "We take all necessary steps to support the companies in their day-to-day business," says Beate Ehle, technical director of BASF Venture Capital GmbH. Those steps include taking board seats and providing direct contact with experts within BASF.
"The start-up company can benefit from BASF's global network and thus get a quicker access to the market," Ehle explains, "whereas BASF can stay up-to-date, support, and be actively involved in upcoming interdisciplinary technologies."
BASF Venture Capital is a subsidiary of BASF Future Business GmbH. Both were established in April 2001, and together they employ 20 people. Like DSM's effort, the goal is to tap into new business areas with growth potential and high expected returns that may be outside the company's current activities. It may assign research contracts to the company's R&D units or develop collaborations. Venture investing provides a window on technology, says Karl-Rudolf Kurtz, managing director of BASF's Future Business unit.
BASF VENTURE CAPITAL has about $112 million to spend over four to five years. With a considerable emphasis on new materials, one-third of its direct investments have been in the nanotech area--in Oxonica, which makes a variety of nanocrystalline particles, and in Catalytic Solutions, which makes nanostructured catalytic coatings for automotive applications. BASF also participates in NGEN and in Chrysalix Energy, a fund focused on fuel cells and related technologies backed by several energy and materials firms.
BASF focuses on investing in small companies with innovative business concepts and technologies in which chemistry is an important key to success, Ehle explains. Its investments are also channeled toward companies that can demonstrate successful applications as well as market demand.
"We expect them to have developed a market-oriented, promising business model, to have a qualified management team in place, and to have demonstrated the proof of concept for their technology," Ehle continues. "As this implies, all investments of BASF Venture Capital are directed toward companies at the expansion stage. We do not invest directly in seed-stage companies."
"Finding the right technology-market match is the most challenging issue, since nanotechnology is an enabling technology and not of value itself," Kurtz explains. As an enabling technology, he says, it's hard to estimate exactly how much BASF invests, but he believes that less than 10% of Future Business' total budget is committed directly to nanotech projects, such as self-cleaning surfaces. However, related areas that might employ nanoparticles, including displays, composites, and fuel cells, account for a "substantial part," he adds.
Nanotechnology has already had a major impact on BASF's traditional business areas, including polymer dispersions for paints, coatings, and adhesives; pigments; and catalysts. For several years, BASF has been a major supplier of UV absorbers based on zinc oxide nanoparticles. Through its R&D, the company has been exploring new nanostructures: hyperbranched polymers in printing inks and automotive coatings, metal-organic nanocubes for hydrogen storage in fuel cells, and nanostructured wax particles in films to create self-cleaning surfaces.
While believing nanotechnology will play an important role in most areas of technology, Axel Ebenau, nanotechnology project manager at BASF Future Business, points out that more than 85% of sales in 2001 involving nanomaterials and nanocoatings were generated by the sale of established products. Even in 10 years, he adds, a very large proportion of nanotech sales will still be "classical nanotechnology," namely pigments and dispersions.
Nevertheless, materials producers are interested in scaling up capabilities to controllably, reproducibly, and cost-effectively manufacture new nanomaterials while they are investigating new applications. Degussa tackled this challenge through one of its focused, exploratory Project House research programs. The firm ran a nanomaterials processing project for three years, collaborating with universities and getting about $6.7 million in support from the German Research Foundation and government.
By the end of 2002, the project had met its goals. "We developed some new technologies and interesting new materials," explains Geoff Varga, director of what is now called Degussa Advanced Nanomaterials, or AdNano, "and the question was, What do we do with these technical innovations?" One option was to integrate the operation immediately into an existing mature nanomaterials business such as Degussa's Aerosil & Silanes business unit.
Instead, AdNano remains within Creavis Technologies & Innovation, Degussa's group for new business and technology platform development, and it operates there as an internal start-up company. Degussa's management believed that further incubation would be best, Varga says. "So for three or four years, we have a financial commitment and political protection for this group to help it gain momentum and reach a critical mass.
"We are trying to retain the critical elements of a start-up, including the flexibility and agility to address a changing business environment, and to abandon some traditional business controls," Varga explains. "You also want to be able to test all your assumptions and be comfortable with a higher level of risk than is typical for a large company or business unit."
Together, Creavis and the Aerosil & Silanes unit will invest up to $28 million in the venture, with the goal of AdNano commercializing products and establishing itself as a profitable business by the end of 2006. Funding could increase or decrease, Varga says, depending upon whether the venture achieves its milestones.
AdNano's fate--staying independent, being absorbed by another unit, or even being spun off--is a few years away. Creavis has a corporate venture group that looks for and evaluates strategic cooperations, acquisitions, and investments, including nanotech and materials technology areas. Some of these, Varga suggests, might complement AdNano's activities.
Since transitioning from Project House status, AdNano has added applied technology and marketing expertise. It has also scaled up the production of some materials from small pilot-scale reactors to a semi-works scale of a ton or so. It makes indium tin oxide, zinc oxide, ceria, and an inorganic nanocomposite containing iron oxide and silica. The venture is working with potential customers both inside and outside Degussa to evaluate the materials.
The nanomaterials market is getting competitive because of the tremendous opportunities available, Varga says. And the success that both small and large companies are starting to have "tells you there is really something here," he adds.
While AdNano gets to behave like a start-up, it also benefits from close contact with a major company. "It's really the critical advantage to being an internal corporate venture," Varga says. "We're allowed to access some of the expertise within Degussa--for example, guidance in business development, marketing, engineering, legal areas, and finance--to increase our chance of success."
Ties with large companies are what differentiate corporate venture investing from investments by traditional venture-capital firms. "More and more, we see that start-ups prefer the investments of corporate venture funds over venture-capital funds," DSM's Kirschbaum comments. While both can offer business advice, "the difference is our technological competencies--that's what we have as a specialty."
Venture Capitalists Are Cautious Toward Nanotech
Until the second quarter of this year, venture-capital investing had gone through two straight years of quarter-to-quarter declines. Investing levels are tied to overall market conditions, especially those for initial public stock offerings. Since IPOs have been almost nonexistent, venture capitalists have been without their favorite route for cashing out. Still, some have been spending cautiously, and nanotech is getting a growing piece of the pie.
Venture capitalists invested between $250 million and $300 million in nanotech deals last year, reports the business information and consulting firm CMP Científica. Overall, the nanotech area accounts for just a few percent of all venture investments. Although the amount invested isn't expected to increase hugely this year, several venture-capital firms are active in the nanotech area.
Venture-capital firms focused specifically on materials or "small or tiny technology" at the nano- and microscale include Ardesta, Harris & Harris, Lux Capital, Millennium Materials Technologies Fund, and NGEN Partners. Others with many life sciences and information technology firms in their portfolios--such as Apax Partners, ARCH Venture Partners, CMEA Ventures, Draper Fisher Jurvetson, and Venrock Associates--have stepped into nanotech as well.
It's taken a few years for nanotech investing to emerge. For example, Harris & Harris first became interested in nanotech and invested in a company more than a decade ago but found nothing else that met its investment criteria until mid-2001, explains Chief Executive Officer Charles E. Harris. Today, more than half its portfolio, or about a dozen companies, are involved in what it calls "tiny tech," up from less than 5% two years ago. All of its new investments are in tiny tech areas.
Because of the poor economy, venture investors have had the luxury of being choosy. It's important to discern, one says, between what still belongs in the lab and what has commercial potential. Another adds that venture-capital investors don't have to invest in "three scientists and a dog, where the dog's simply the business guy." Instead, they can look at later-stage companies that have established management teams and have progressed in developing technology and applications.
"We see about a deal or two per day, and usually do five to six per year," says Peter S. H. Grubstein, managing partner of NGEN. The firm expects, however, to complete about eight deals this year and find a similar number next year. Each transaction typically involves an investment of $3 million to $4 million by NGEN.
When it comes to nanotechnology, venture-capital firms say they are looking for the usual things: good technology, excellent management, a well-thought-out business plan, near-term products, large markets, and strong intellectual property (IP). Emerging fields offer a rare and short-lived opportunity to build unique IP positions, points out Douglas W. Jamison, vice president at Harris & Harris.
Investors also want to see a company achieve some success after a reasonable amount of time. "We really want to see companies going to the market within 24 months, and so we want to be talking to their customers when we are investing," Grubstein says. "They may not be buying product yet, but we expect them to be doing joint development agreements."
Harris says seven years--from the time his firm puts the first dollar in until the opportunity to monetize it, as through an IPO--is a reasonable time horizon in early-stage high-technology investing. His company has looked at nearly 125 business plans, tracks more than 400 companies, and has made three investments in the past 12 months.
Venture capitalists also like to see strong investment groups, including other venture-capital firms and corporate investors or partners, connected with the companies they choose. But they don't want too many investors around to dilute their holdings. Competition among firms for good nanotech investment does occur, as was evident this year when a few small firms became hot properties and had oversubscribed financing rounds.
Nanosys, which has broadly locked up nanomaterial IP through licenses from several major universities, raised $38 million in June, $8 million more than planned. Including this latest round, the two-year-old company has raised a total of $70 million. Nanostructured catalyst coatings producer Catalytic Solutions brought in $32 million in May for a total of $72 million since its formation in January 1996. And Optiva, a developer of self-assembling, ultra-thin nanomaterials for optical uses, got $9 million more than it expected in a round worth $30 million in January.
The future of nanotech investing will depend on several factors: overall financial market conditions, the quality of small companies, and the success nanotechnology has in penetrating real products and real markets.
For example, Eastman Chemical says it has a formal commercial relationship with 80% of the companies in its investment portfolio. Its venture group looks for close strategic fits and has invested in 18 companies, including two in materials--Optiva and Konarka Technologies, whose photovoltaic technology uses dye-sensitized nanometer TiO2 crystals.
ChevronTexaco --which has a large corporate venture effort in energy, information technology, and materials--also invested directly in Konarka, as have DuPont and Bayer indirectly via NGEN. Bayer also participates in the Millennium Materials Fund.
Meanwhile, H.B. Fuller and Eastman Kodak made strategic investments in June in Nanosys, which is developing a variety of nanostructured materials. And ConocoPhillips has invested capital and intellectual property rights in SouthWest NanoTechnologies, a University of Oklahoma spin-off producing carbon nanotubes.
The $3 billion being spent globally by governments to support nanotech research, and an estimated equivalent amount by large corporations in R&D spending, dwarfs the few hundred million dollars spent by venture capitalists each year, Científica's Harper points out. However, among nanotech venture investments in the U.S., the U.K., and Germany, venture capitalists account for 80 to 88% of the deals, and corporations, about 12%.
In Japan, the opposite is true, with corporations making nearly 90% of nanotech venture investments. Japanese companies, active in many fields, will often introduce their own or captive production of nanomaterials, Harper points out.
Just recently, Frontier Carbon Corp., owned by Mitsubishi Chemical and Mitsubishi Corp.'s Nanotech Partners subsidiary, started up a 40-metric-ton-per-year fullerene plant in Kurosaki (C&EN, Aug. 11, page 13). In the U.S., Summit Specialty Chemical, a subsidiary of Sumitomo Corp., has retained the investment banking firm Fidelys to find prospective nanotech companies for licensing agreements.
Both venture-capital and corporate investors look for returns on their investment. "The return in the materials sector isn't always attractive to venture capitalists because these can be high-volume, low-margin businesses, and quite capital intensive to get up and running," Harper explains. However, the scale-up process is much easier for major companies accustomed to building plants and dealing with related manufacturing issues.
"And conventional venture capitalists either have to see the company sold or have an initial stock offering to get a return," Harper says. For corporate investors, there can be financial and strategic returns because acquiring the small company is another way to exit their investment. He considers it a likely outcome in nanotechnology that the large companies will acquire "the cream of the start-up crop."
In 2002, DuPont quietly acquired NanoSource Technologies, a maker of titanium dioxide nanopowders. The deal was generally considered a move to capture the smaller firm's intellectual property. The same year, DuPont's central research group licensed a production process from Carbon Nanotechnologies to produce carbon nanotubes for use in flat-panel displays.
Besides its joint venture with Air Products, DuPont's most public nanotechnology venture is as a founding partner of the Institute for Soldier Nanotechnologies (C&EN, May 26, page 10) at Massachusetts Institute of Technology.
Dow has been similarly subdued about its nanotech efforts. In the electronics area, its SiLK resins for semiconductor manufacture involve nanoscale pore structures. Competitor Honeywell has Nanoglass inorganic materials for similar applications, while Rohm and Haas's Shipley unit has hybrid nanostructured materials. Dow also is working on display technologies, using polymeric light-emitting diodes; dendrimers, some of which are produced under license by Dendritech; and drug delivery applications.
HOME GROWN Nickel nanowires produced at GE have the potential to impact products across virtually all its businesses.
Dow has licensed nanoparticle engineering technologies from collaborators at the University of Texas, Austin, which it now uses to increase the solubilization of drugs. In late 2002, it launched production of drug particles at the commercial scale and began offering this service to pharmaceutical customers.
MOST MAJOR polymer producers have been investing in nanocomposites, using nanomaterials as fillers, for several years. Basell Polyolefins' thermoplastic nanocomposite has been used since 2001 in step-assists on GM minivans. Honeywell launched a nylon-based nanocomposite under the Aegis name in September 2001 using Nanocor's nanoclays. Nanocor also has marketing alliances for nanocomposites with Mitsubishi Gas Chemical and for nanoclay masterbatches for polyolefins with PolyOne and Clariant.
Süd-Chemie is marketing nanoclays as polymer additives for improved flame retardants. Meanwhile, Bayer produces a flame-retardant polycarbonate/acrylonitrile-butadiene-styrene nanocomposite and, through its GE Bayer Silicones joint venture, has launched a scratch-proof and soil-repellent coating based on silicate nanoparticles embedded in an acrylate matrix.
Even for a company as large and diversified as GE, nanotechnology has the potential to impact every one of its businesses, says Scott C. Donnelly, senior vice president for corporate R&D. Its dedicated nanotech R&D efforts, which have been in place for almost three years, are largely homegrown, building on the company's internal materials science strengths while involving some academic collaborations and a few other outside parties.
The company's focus areas include nanotubes and nanowires, for conductive plastics, photovoltaics, and other uses; nanoparticles, for electronic uses; nanocomposites and nanostructured metallic systems, for aircrafts and engines; and nanoceramics, for coatings and fuel cells. Work centers on synthesizing, screening, process scalability, and controlling structures and properties.
"We already have a number of very important intellectual property positions, big breakthrough technologies," Donnelly says, "but these things still have to mature."
Much of what's being done today is "still in the science mode," adds Margaret Blohm, manager of nanotechnology programs at GE Global Research. "We're trying to transition the exciting things you can do in a hood to being robust technology for GE." Her multidisciplinary group of about 40 researchers looks at the more revolutionary ways nanotechnology could impact GE and also consults with the company's businesses on possible future directions.
Nearer term projects include work in nanocomposites and nanoceramics coatings, Blohm says. Longer term projects, she says, are probably of a biomimetic nature, leveraging self-assembly processes to make new materials. Practical issues, including whether nanotech is the best option, also are considered. "Either we have to see a path or we have to create that path where the cost per performance would be right," she adds.
It's dangerous to get caught up in "nanotechnology just for nanotechnology's sake."
Many of GE's product areas have very long cycle times from a technology standpoint, Donnelly says, and those dominated by materials science frequently have five- to 10-year-long R&D programs. To address this, he has taken a contrarian approach by actually increasing R&D spending despite the tough economy.
"We believe investing through the down cycle is a huge competitive advantage," Donnelly says. "Now is the time to invest. You can't wait until the economy and customers' businesses come back." He says GE prioritizes its projects by deciding what material attributes will be critical to its customers and then pursues those to make them available.
The appearance of nanomaterials in niche applications has producers hoping the need for larger volumes will grow, which in turn should make prices drop and users happy. Both sides believe they will eventually be better off if cheaper materials encourage broader product penetration. Nevertheless, with this process expected to take several years, investors in internal R&D or in external ventures will need patience to see a return.
For GE and others, the initial uses of nanomaterials are bringing largely incremental changes. "Having the best products and technologies out there are still great breakthroughs," Blohm adds. "And we've got to build the credibility that nanotechnology is a real solution."
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