Good question!
Technology Review, besides being a great magazine edited by Jason Pontin, who I have known since the heyday of Red Herring, also puts on some great conferences. So I was excited and honoured to be invited to EmTech Spain, a two day conference in Malaga focussing on emerging technologies.
Along with my World Economic Forum colleague Javier García Martínez of Rive Technology and the University of Alicante, we were discussing what nanotechnology is, how to build a business out of it, and where it will take us.
Normally at these kind of conferences, discussing everything from the future of cities to social media, nanotech is one of the most futuristic and least understood technologies on the agenda – making me feel like a cuckoo in the nest when most peoples idea of emerging technology is something that they can have on their iPhone next week. However the “imagine a world where…” speech was given by Richard Kivel this time, discussing regenerative medicine, while Javier and I discussed existing and future applications of nanotechnologies.
So what use is nanotechnology? Simple, I think is makes a key contribution to addressing issues such as energy and health, allowing us to support today’s 7 billion and tomorrow’s 10 billion people in an increasingly sustainable manner. You can read my thoughts in the original Spanish, or as a rougher and less polished Q&A in English below.
1. If we make a more efficient use of resources (energy, agriculture, water) through technology, could a growing population (eg, India or China) join the living and consumption standards of the developed world?I’m an optimist about technology, after all it has got us this far, supporting another billion people every 12-14 years which would have been unimaginable only a hundred years ago. New technologies certainly help us make better use of resources but we have to remember that many of those resources – fossil fuels, minerals – are finite and their use does come at an environmental and social cost. If the plan was to continue with the same age old patterns of consumption, take-make-waste, then the answer to this question would have to be no. But in step with new technologies we are moving towards new patterns of consumption, with the energy balance shifting away from fossil fuels to renewables such as solar harvesting and biomass. So life in the 21st Century for China and India won’t all be Cadillac Eldorados, as social and economic pressures shift us into new modes of consumption. What I do think we will see is more sustainability, whether in energy or food, and new technologies being used to proactively prevent disease and pestilence – as we have already seen from genetically engineered plants to point of care medical diagnostics – rather than simply cleaning up the mess.
2. This increase of efficiency due to the use of technology, must run in parallel with a reduction in consumption?Although we think technology moves fast – not many people predicted the iPhone or Facebook – the big leaps forward, the ones that are really transformative take 15-30 years. The internet didn’t just appear in 2000, it was the combination of a range of different technologies maturing over the previous 30 years that made it usable, accessible and transformative. So we have to reduce consumption in the short term while we wait for the long term benefits of technology to kick in.
3. One of the main Cientifica´s aims is to ”set up and design technology and commercialization programs for governments around the world”. In which projects is involved and which challenges is facing now?In the last ten years we’ve advised everyone from Europe and the US to a number of Gulf and African states. The challenge is always the same, how to make the best use of your resources to get an economic impact. The most successful nanotechnology programs, for example, are in countries such as the US, Japan and Germany where industry is hungry for new technologies to maintain global competitiveness. But the research has to be appropriate, there is no point in setting up a centre focussed on semiconductors if the benefits of that research will end up in Singapore or San Jose.
4. What are the main differences between a nanotechnology program designed for Spain and one designed for South Africa, EEUU or China?In some respects Asian programs are easier to design because there is more likely to be a long term vision of where the economy should be in 5, 10 or 20 years. In the rest of the world politician have to be convinced to continue programs every few years so it is important to be able to show results. I’m always an advocate of giving the funding to small innovative companies, the ones with high growth potential which will have the biggest economic effect in terms of jobs and tax revenues, but many agencies prefer a conservative approach, giving cash to large established industries which although reducing the chance of failure, also reduces the potential economic benefits.
5. One of Cientifica´s key ideas is that success in business depends not only on innovation but also in putting together technology and a global trend. Will nanotechnology be a standing out technology platform compared to others? Could you cite another three examples of technologies that would play an important role in the future?Catching a trend is a must for any innovation based business. It can be a a technology trend such as Apple managed with mp3 audio, or a social trend such as Facebook, but having the right product at the right time is the most important factor in success. But nanotechnology is no more a platform than chemistry or physics – it’s the application of the technology that matters, and that often involves intersecting with other areas of emerging technology.Choosing three technologies out of all of those enabled by nanotechnologies is hard, but let’s start with organic, or plastic electronics, medical diagnostics and instrumentation.Organic electronics means we print electronics, using inks containing nano particles which make them conducting or semiconducting, with a modified inkjet printer. So the cost of a printed electronics fab is around 10% of the cost of a silicon fab, and energy use is cut by 90% too. But don;t expect organic electronics to start competing with silicon. The CMOS technology developed over the past 50 years is very advanced and more importantly well characterised. What this means is that we can design a process t make a chip, and everything, from the yield of working devices to the input costs will behave pretty much as we expect. By contrast organic electronics in its infancy. It wont be able to make super fast processors like CMOS, but it has the advantage of being very very cheap, so when we talk about ubiquitous electronics or the ‘internet of things’ then a lot of those ‘things’ will be printed.Medical diagnostics is another area that is ‘on trend.’ The use of all kinds of nanosensors, from quantum dots through carbon nanotubes to printed detectors addresses the problem of ageing populations and rising healthcare costs. Early diagnosis saves a huge amount of cost for health services and medical insurance companies. Combine this with genotyping to see what diseases you may be susceptible to, and also which treatments will work best and the balance of healthcare can shift from intervention to prevention.Given my background in analytical instruments, I’d also have to add scientific instruments as a key enabler. Better instrumentation has enabled us to really start understanding how a lot of biological processes work, from the bottom up, and the more we understand about nature the easier it is to try to copy a few of those tricks.
6. More and more knowledge is being generated thank to computing and science interaction, but that growth is not proportional to the available capital to turn this ideas into products. Where can we find ways to finance early stage technology business, especially those that need a big inversion like cleantech/biotech start-ups?This is the problems of the technology overhang. When we look at the worlds major problems we may already have a number of the technologies we need to start addressing them proactively, but unless we can find the right mechanisms to turn scientific innovation into usable technology then we will have wasted our effort. The innovation process is much more inefficient than most people imagine, relying on someone spotting the potential of a bit of science, that potential somehow being funded and then the resulting company having the right people with the right skills and the right timing to get it to market. Venture capital isn’t too much help. Why bother with hard to understand, risky, expensive and long term stuff like nanotechnology when it only takes a couple of guys with a few laptops to create the next Facebook – and you’ll know whether it will work in 18 months rather than 5 years.One of our projects which arose from work we have done with the World Economic Forum, is the creation of a Centre for Emerging Technology Intelligence which will look at the longer term issues and attempt to find ways to make the innovation process more efficient. It;s clear that we can;t just wait for a disater to happen and then expect to pluck the technological solution from a tree, we have to be much more proactive. But in doing this we have to also find the win-win-win situation for technology, business and society. While some emerging technologies may result in clear economic benefits for the developers, this is only a subset of the technologies available. In many cases the creation of shared public-private responsibility for their development may be the catalyst that unlocks the full potential of the technologies.The new model is built on the premise that up-front investment in resources, knowledge and people will lead to a significant reduction in future liabilities. Its success depends therefore on a commitment to invest in technology innovation in new ways. This does not necessarily mean new financial investment, although in some cases this may be warranted. Rather, it implies strategic investment in research, in knowledge translation, in networks, in systems and in people, which increases the likelihood of technology innovation supporting long-term social and economic development.
7. In which emerging technology would you recommend to invest in the coming years? Which countries and institutions will be the main investors?I particularly like the area where life sciences, nanotechnology and information technologies are combining. Areas such as synthetic biology and regenerative medicine are already demonstrating their own versions of Moore’s law, and the development of cheap point of care diagnostics addresses so many economic and societal issues, while also circumventing major headaches such as privacy and data security concerns.
8. In terms of climate change and sustainability, carbon productivity will be a major concern for the industry. Is a priority to invest economic resources in developing CCS technologies or would be better to spend them in installing renewable energies that do not emit CO2?
I think we need to be a bit more ambitious in our outlook. Solar and wind energy are fine, but they don’t really address the cause of the problem, or come up with any kind of integrated or sustainable solution. If we are serious about climate change, and we should be, then we need bold ambitious and global projects to address it, making use of the widest possible range of technologies. Even if we cut carbon emissions to zero tomorrow the CO2 already in the atmosphere will cause major effects for the next hundred millennia, so sticking a solar panel on your roof and cycling to work makes hardly any difference. Of course we need both CSS and renewables in the short term, but we need to look kore than ten years ahead.9. If we already have the technology to address global problems such as water shortages and disease… What are the real reasons of not being using it now? Who owns this kind of technologies and how are they like?In many cases the reason is economic, the people most affected by water shortages and disease are those least able to pay. Our model for CETI puts a lot of emphasis on social in addition to financial entrepreneurship. Successful partnerships have already demonstrated the power of this approach, such as the Gates Foundation support of new metabolic routes to the production of the anti-malarial drug artemicinin – the technology platform allows the producer to develop other more economically viable drugs while making the anti malarial drugs available at low cost.
10. Will solar energy be able to provide energy security if a rise of efficiency is achieved due to nanotechnology breakthroughs? When do you estimate that we would reach that security status?Solar will only ever be a part of the energy solution. We also have to look at storage and transmission in order to produce a workable solution. Billions have already gone into organic photovoltaics – the development of cheap plastic solar cells – and I’m confident that the current issues of efficiency and lifetime can be overcome. But its not the only solution, for example the planet creates 170 billion tones of biomass a year, of which we utilise around 7 billion tons, another massively under-used resource which could enable biotech based solutions such as bioreactors to play an important part in energy security. However, this creates another problem for Europe in that we cannot produce all the biomass we need for energy generation, so if we are not dependent on hydrocarbons from the middle east and Russia , we may be equally dependent on biomass imported from Africa!
While working on our report on Using Emerging Technologies to Address Global Risks, one of my favourite SciFi authors, Neal Stephenson, popped up with an essay on Innovation Starvation.
It echoes Tyler Cowen‘s arguments that all the easy big stuff has been done, and that all we have left to look forward to are incremental improvements rather than world changing technologies.
Stephenson, being a science fiction writer, looks at space as an example where a culture of risk avoidance, cost cutting and politics combine to stifle innovation. As he points out, even China’s space program is merely copying what the USA and Soviet Union were doing 50 years ago rather than doing anything innovative.
It is undoubtedly a problem that plagues the world. Whether it is large ambitious space programs, or providing a government stimulus for technology companies, the emphasis is always on avoiding failure, which involves avoiding anything innovative. The million lost by a failed company always generates more headlines for governments than the hundred million successfully leveraged as we can see with the furore over Solyndra – although governments have a poor track record of picking winners.
So how can we kick start global innovation? As I argue in Using Emerging Technologies to Address Global Risks we need to focus on the big issues that we can all agree on. Water might be a good start.
Over the past five years I have come across numerous innovative approaches to water scarcity, from desalination plants that double as greenhouses to nanostructured membranes that dramatically cut the energy needed for desalination, but I cant remember a single one of them attracting significant investment. That wasn’t because the technology is poor, it is simply because of the costs involved in getting it to market put it outside the risk which any early stage investor would be comfortable with. Raising $50 million for social networking is relatively simple, but for water remediation it is a stretch too far. Development times in excess of 3 years and uncertainty about who will pay for the technology combine to make it almost unfundable.
For a small fraction of the current cost of dealing with drought – something that will only increase in the future – we could develop a suite of technologies to mitigate the shortage of potable water. But we won’t.
I’m not convinced by the innovation starvation argument, I think we have plenty of innovation but we lack the political will to deploy them. The challenge isn’t so much stimulating innovation as effectively making the case for governments and international institutions to use it.
The Wall Street Journal points to further evidence of the collapse of Venture Capital. Typical of the doom laden quotes is this:
“Dallas is an entrepreneurial city, but it won’t be driven by venture capital going forward,” said Daniel T. Owen, a venture capitalist at the 16th-floor firm H02 Partners, which plans to wind down its venture business over the next few years. “The pure venture-capital model is really thriving in just Silicon Valley and Boston.”
The bottom line is, in this case the bottom line, as VCs who haven’t managed to make any money for their investors are left bemused by the unwillingness of anyone else to hand over cash. I’m bemused as to whether that’s an arrogant or stupid view of the world.
Toto, This isn’t 1997 any more!
One of the biggest threats to scientific innovation has always been the lack of capital. Venture capital only really makes sense if companies can grow rapidly, and most other equity investments tend to be illiquid until an exit is found.
Brian McConnel at Gigacom takes a look at ‘Class R’ stock, a possible investment model that is halfway between a conventional investment and a loan. Here’s how it works.
Let’s say for rough numbers that a group of angels invest $500,000 for a 10 percent stake in an early-stage company and 5 percent of gross revenues with a 5X cap (total payout: $2.5 million). The company does OK and turns into a nice small business with revenues of $2-$3 million dollars a year. Happy with that, the owners decide not to sell or try to grow much bigger. The investors in this situation will be receiving $100,000-$150,000 per year (off $2-$3 million/year in revenue), which is not a bad annual return, and will get up to $2.5 million over the life of the agreement. In other words, everyone wins — the entrepreneur is rewarded for creating a viable business, and the investors do well without having to force a sale. And they still have 5 percent equity so that if, 20 years later, the founder retires and the company gets bought, they are very happy vs. just merely happy.
Of course there is no downside protection, but then again there rarely is. However it does address one of the major problems with commercialising technology, that of what happens if the company is just a nice company, rather than a spectacular success. In some respects it’s not too different from paying a dividend, which most companies prefer not to do, certainly in the early stages, but it may be a way , combined with tax breaks, that would actively encourage much needed angel investment.
PS it’s worth looking at the comments for some other alternatives.
Interesting to see Zettacore raising a $21m series C, some six years after they first started our promising to replace silicon with molecular memories, although that’s not the application that is attracting interest right now.
As Nikkei Electronics reported last week – they look to have a customer for their Molecular Interface (aren’t most interfaces molecular?) technology that helps with conventional semiconductor manufacturing. While their initial plan for global domination of the memory business seems to have been elbowed aside with the fall in price of flash memory from a dollar a Mb 2001 to less than a dollar a Gb 2009, the R&D does seem to have been useful for something…
ZettaCore said MI technology enables deposition of copper on smooth dielectric, and lamination of dielectric on smooth copper in high-performance IC substrates, HDI boards, high-speed boards, flexible PCBs, and wafer level packaging. Since surface roughening is eliminated, customers can realize finer line/space dimensions and improve signal integrity while using conventional materials and processes.
“ZettaCore MI technology offers IC substrate customers the ability to leverage their manufacturing infrastructure and yet realize finer line/space design rules. For example, customers can advance interconnect geometries with the current GX-13 material beyond what is possible with conventional roughening technologies. Since the interfaces are smooth, losses related to skin effect are minimized which would improve system performance,” said Takao Sakurai, general manager of Specialty Chemical Dept, Ajinomoto Co Inc.
By working with Ajinomoto, ZettaCore is offering a complete and seamless solution to substrate manufacturers.
“Ajinomoto GX-13 build-up resin has a dominant market share in flip-chip IC substrates. Customers can now realize 10µm line/space design rules and beyond by using ZettaCore MI technology in conjunction with GX-13 material,” said Srinivas Nimmagadda, VP of Business Development at ZettaCore.
That’s another set of rebels assimilated into the world of CMOS then.
Stephen Fleming at Academic VC has an interesting article about the diverging interests of angel investors & VCs. The basic premise is that the high returns required by venture funds drive them to take decisions which are neither in the interest of the founders nor the early stage (Angel) investors.
I’ve seen this happen in a number of companies, and it’s not pretty. As a result, the founders often end up with next to nothing, even if there is an exit.
British scientists are hopping mad about comments from Bank of England Governor, Mervyn King, who recently argued against increased science funding, presumably on the grounds that all the money had already been spent on health and safety agencies, totally ineffective government agencies and bailing out Scottish Banks. I would expect the Governor of the Bank of England to understand a little bit of basic economics and that economic growth has always come from technology (think of the Industrial Revolution which created the British Empire) rather than bulldozing money into a pit and setting fire to it. I think I’m hopping mad too.
With lunatics like this running the asylum its hardly surprising the UK economy is in its present state.
Sir Roy Anderson, rector of Imperial College is being firmly diplomatic rather than hopping mad, and calling for a £1bn venture capital fund to support small high technology companies, an ideas as insane as Mervyn Kings. For all the whinging about the UK venture capital industry, it’s not too bad. It’s not Silicon Valley but it’s much better than most of the rest of the world. However, like their UK counterparts it doesn’t work too well, and shovelling yet more public money into another lame duck industry won’t do any good either.
It’s hard to believe that the finest minds in the country can’t come up with a better idea for an economic stimulus package than chucking loads of public money at things that don’t work. Putting their underpants on their heads and shouting at the traffic would have as much effect and be a lot better value for taxpayers.
Despite its recent woes, there is enough liquidity in the VC industry to continue doing what it does, but what it doesn’t do is invest in early stage technology companies. In fact not many people do and that’s where the money really needs to go, to support early stage companies and get them to the stage where they can attract further capital from customers, banks or even VCs.
As I wrote in February, Let a Million Flowers Bloom!
Given that the returns on most asset classes are now negative, entrepreneurs are one of the few places where some wisely invested cash will give a decent return. Imagine what would have happened if governments had refused to bail out the banks and put the cash into technology, entrepreneurs and small businesses instead? We’d still be a few hundred billion in the hole, but at least there would be some chance of getting some of it back and stimulating the overdue reinvention of the economy.
The Wall Street Journal has an interesting article about how “with their core business in shambles, some venture capitalists are
changing their stripes, styling themselves as investors in distressed assets and public companies.”
Here’s why:
Start- ups today take a median 6.6 years to go public or get sold, up from 5.4 years in 2005, according to research firm VentureSource. Through the first nine months of 2008, venture funds lost 4.3%, according to Cambridge Associates. Those figures don’t take into account the severe decline in asset values since mid-September.
For limited partners, the investors in Venture Capital funds, this is proving a little worrying. One asset manager commented in the WSJ that “Traditional venture capitalists work with young private companies and they should stick to that niche.” It is a little odd that if a company with a platform technology wants to exploit it outside their initially defined area then their VCs will get rather shirty with them, but it seems perfectly OK for VCs to start dabbling in things outside their own core competence.
My feeling is that this is just the beginning, and the traditional dividing lines between venture capital, hedge funds and even banks will become increasingly blurred as a result of both the current financial meltdown and the impending new regulations on both sides of the Atlantic. Taking an existing structure such as a venture capital find and tacking a bit of distressed asset financing or PIPES (private investments in public equities) onto it is like fixing a broken windowpane with some masking tape and brown paper.
What is needed is a more joined up policy that can help unleash the technologies that we, as taxpayers, have already funded through the academic system, and get this out into the wider economy.
Umair Haque, whom I’ve referenced before, has a nice post echoing some of the sentiments expressed here and at a growing number of other places – namely that a new economy needs both new financing models and some more creativity. In Yorkshire we’d say it was a clapped out old nag that was only fit for the knackers yard, but here’s that translated into Harvard Business School speak
We can’t reinvent the economy without, well, investing in reinventing the economy. So here’s a distinction you might want to draw. VC 1.0: “monetizing”, aka selling the same old mass-produced junk to tuned-out “consumers”. VC 2.0: seeding better economies, industries, and markets for a 21st century bereft of value creation, aka radical structural transformation.
The problem is, of course, that venture capital is a very hidebound industry, if it was a person you’d expect it to be shouting at the television and complaining about the age of policemen and the things the younger generation get up to. Venture capital is a 20th century industry perhaps as ill equipped for the current age as General Motors, and there seems to be a growing sentiment that it is a model that should either gracefully retire, or at least transform itself into something more relevant to the 21st Century.
The slowdown in the pace of China’s development has been one of the consequences of the current economic woes, but may also provide some great opportunities as James Fallows explains in the Atlantic. It’s an excellent article going far beyond the usual post Olympic slowdown stories and looking at how battery companies such as BYD with their electric vehicles are innovating faster than their western rivals.
The shift in attitude is neatly summed up in BYD SVPs Stella Li’s comments “Designing the car, building the car, that is the easy part” – or in other words once you have the battery technology right you don’t need Ford or GM any more, enabling you to capture the entire value chain, at least in a market for low cost basic vehicles such as China.
Coupled with the news that China is also the world’s most robust emerging market for private equity and venture capital finance and catching the US in both quantity and quality of nanoscience publications it looks as if the real innovation crisis is occurring in Europe where academic excellence has no easy outlet.
If we look beyond the short term, and try to understand what the economy of 2014 will begin to look like, it would be unwise to bet against the US or China, but I do worry about Europe, and the UK in particular where there still seems to be no coherent policy for getting academic innovation into the economy.
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