Konarka Technologies

VENTURE WELL: JURVETSON SEES BIG PROFITS IN SMALL PACKAGES

By Claire Poole
TheDeal.com

Nov. 3, 2003 - When Steve Jurvetson came to Houston a few weeks ago to speak at Rice University on a subject near and dear to his heart -- nanotechnology -- it was like he was preaching to the choir.

The city is pinning some of its hopes for the future on this nifty technology that promises to build, power and maneuver big things from small, with at least three companies sprouting out of work being done at the university (inspired by Rice chemistry professor and Nobel Prize winner Richard Smalley).

And who better to tell the city's wildcatters to go after it but the nanotech evangelist himself?

Jurvetson's firm, Redwood City, Calif.-based Draper Fisher Jurvetson, has invested in 16 -- count 'em, 16 -- nanotech companies, more than any other venture capital firm on the face of the earth. They all have cool names, too: Arryx Inc., BinOptics Corp., Coatue Corp., D-Wave Systems Inc., EGeen Inc., Imago Scientific Instruments Corp., Konarka Technologies Inc., Luminus Devices, Microfabrica Inc., NanoCoolers Inc., NanoOpto Corp., Nantero Inc., NeoPhotonics, SiWave Inc., Solicore Inc. and ZettaCore. And not one is based in Silicon Valley, he likes to note.

The 36-year-old Jurvetson earned his undergraduate degree in electrical engineering from Stanford University at the top of his class -- in 2-1/2 years -- as well as his master's in electrical engineering and M.B.A. He was an R&D engineer at Hewlett-Packard Co. and also worked at Apple Computer Inc., NeXT Software and Bain & Co. Yet he has an Opie look about him, and you expect him to say "gee whiz" any minute.

But Jurvetson led the firm's investments in Hotmail, which was bought by Microsoft Corp. for $400 million; Tradex, which was acquired by Ariba Inc. for $6 billion; and Cyras, which was sold to Ciena Corp. for $2 billion. He's also been described by the business media as being among the sharpest venture capital investors. So if he thinks nanotech is the hottest thing since sliced bread, you try to believe him.

Still, some who are bullish on individual companies pursuing nanotechnology applications have questioned DFJ's eagerness to lump such endeavors together as a single scientific or investment category. After all, no one ever defined molecular-level developments in drug development, semiconductor and materials science investments as "microtechnology," so why should it be any different as development moves down to the atomic level?

Perhaps the wildest thing he's preaching these days: quantum computers that solve problems through -- you guessed it -- nanotechnology. And the company he's backing is Vancouver, British Columbia-based D-Wave Systems, which hopes to use the computing capabilities of atoms to do calculations millions or billions of times faster than today's most powerful supercomputers. DFJ and others threw it $7.1 million recently, and Jurvetson has a seat on the company's board.

Some critics think Jurvetson is smoking something. The idea has been worked on by the smartest of the bunch, including IBM Corp., Massachusetts Institute of Technology, NEC Corp. and Los Alamos. But D-Wave is the only one trying to actually build a quantum computer, which it thinks is about five years away and would be roughly the size of a peanut.

"Quantum computing has the potential to change the world as we know it," Jurvetson has said.

One of his nanotech investments -- Denver-based ZettaCore -- uses a molecule similar to chlorophyll to make memory chips that remember data even when the power goes off (something that's pretty attractive, given what happened in the Northeast not too long ago).

Another investment -- Lowell, Mass.-based Konarka -- is developing solar cells by spreading a thin film on sheets of plastic. They would be lighter, stronger and cheaper than today's applications -- also an attractive thought, given high natural gas prices.

A few nanotech products have already made their way to the market, such as stain-resistant pants made by Dockers and Eddie Bauer and tighter tennis balls by Wilson Sporting Goods Co. But that's just the tip of the iceberg, Jurvetson says.

"It's hard to think of an industry that won't be touched by nanotech," he said. "It is the next great technological wave and the next phase of Moore's Law. IBM has more lawyers working on it than engineers." That might tell you something right there.