By: David Whelan, 01.29.04
BURLINGAME, CALIF. - Brainiacs at companies like Hewlett-Packard, Intel and Sun Microsystems have hailed the science of small things as an industry-changing force. Nanotechnology, broadly defined, involves the scientific development of brand new machines and materials at an atomic or macromolecular level.
Kevin Compton, a partner with Kleiner Perkins Caufield & Byers, believes that nanotechnology will aid in developing semiconductors, though he is tight-lipped about what companies he has funded in the area. However, his partner Vinod Khosla recently led a $17.5 million round of investing in nanotechnology chip-maker Zettacore. He also joined the board. The move represented a victory for nanotechnology investors, since Khosla had earlier expressed doubts about nanotechnology's promise.
There are already a handful of micro-caps that purport to utilize nanotechnology, including Nanogen (nasdaq: NGEN, Nanophase Technologies (nasdaq: NANX) and Nanometrics (nasdaq: NANO.) The biggest of these, Nanometrics (with $29 million in revenue through the first nine months of 2002), will supply Hitachi High Technology and other Japanese companies with technology for integration into next-generation semiconductors.
IBM (nyse: IBM) is applying nanotechnology to the development of disk drives.
Still, Compton says that practical application of the technology is more science-fiction than reality. "There's nobody who's jumped to the front," he says.
That doesn't mean that some venture capitalists aren't trying to get in front of what could be a revolutionary step forward in science and engineering. One of the most active investors is Steve Jurvetson of Draper Fisher Jurvetson, who has sunk over $50 million in 18 nanotech start-ups, including Zettacore and Konarka Technologies, which applies nanotechnology to solar power.