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What Is Happening to the Funding for Commercializing Nanotechnology?By Pearl Chin - Managing General Partner, Seraphima Ventures |
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Within the past few weeks I have heard two pieces of very disturbing news from the investment industry that could negatively impact commercialization of nanotechnology in the United States.
The first piece of disturbing news is that there is an initiative by the Bush Administration to cut funding to the National Institute of Standards & Technology (NIST) (formerly known as the National Bureau of Standards (NBS)). Since I have done some research work at and with NIST, I admit I do have a personal interest in this excellent lab's welfare. NIST, since it is overseen by the Department of Commerce, is never quite perceived as the technical powerhouse of a government lab that it is, mainly due to misconceptions of what type of research it does. There are excellent scientists there who do research at this government lab that in many cases have very little to do with Standards and more to do with Technology and much of it is nanotechnology. Many do not perceive Commerce as having to do with technology and that may be because NIST does not have the word "laboratory" in its name like Sandia, Oak Ridge, Argonne, Fermi, Jet Propulsion, or Brookhaven. Hence it suffers from not being recognized as a heavyweight contender in government labs. Forgive me if I have left out a few government labs in this list because there are certainly others but I am just making a point here. Many do not even realize that NIST has a neutron reactor on site that is visited by scientists all over the world who collaborate with the NIST scientists. Of course, scientists all over the world also collaborate with the non-reactor scientists as well. I beg the environmentalist please do not go up in arms against NIST now because there is a reactor on the grounds. NIST has never hidden this fact from the public and it goes out of its way to meet government safety standards in shielding and safe operating protocols.
However, my bigger concern with this first piece of disturbing news is that the funding is also going to be cut from the Advanced Technology Program (ATP), another underrated and under-marketed program in the federal government, overseen by NIST and headquartered on its grounds in Gaithersburg, Maryland. Few know that the ATP is one of the only federal government programs that exist to fund commercialization of early stage technology. Most federal funding programs, such as the 21st Century Nanotechnology Act, fund early stage research and development at the university and government lab levels at pre-commercialization stage. However, ATP is a program that bridges that funding gap between seed and early stage and VC funding to commercialize the technology. Most people do not even know about ATP besides that it also stands for an important molecule (adenosine triphosphate) in the energy conversion cycle in the human body.
NIST is one of the government agencies on the list for federal nanotechnology funding, and the ATP is under NIST's umbrella.
So, the Bush Administration signs on December 3rd, 2003 into law The 21st Century Nanotechnology Act to fund research and development of nanotechnology on the university and government lab levels but then begins initiatives to cut the legs off of the very programs that can help commercialize these technologies? Does this make sense? I understand that we need to allocate funding to military and Homeland Security initiatives. But what about the nanotechnologies that have military and Homeland Security applications, such as sensors for biological and chemical agents and weapons, one of our biggest security fears? How are we going to commercialize these technologies without funding?
Wait… It gets worse.
The second piece of disturbing news is that the Small Business Investment Company (SBIC) program under the Small Business Adminstration (SBA) is undergoing major changes. Typically the SBIC program offers two options for funding: Participating Securities and Debentures. The Participating Securities, as opposed to the more traditional Debentures or debt based funding, has been stalled. The Debentures option is still active. Funding by debentures require companies to make semi-annual interest payments, much like balloon type mortgages. No new licenses for Participating Securities SBIC's will be issued as of end of September 30, 2004. For the past 12 months, steps have been taken to curtail the Participating Securities part of the SBIC program. Strangely enough, this started around the same time the 21st Century Nanotechnology Act was signed into law.
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Dr. Pearl Chin has an MBA from Cornell, a Ph.D. in Materials Science and Engineering from University of Delaware's Center for Composite Materials and B.E. in Chemical Engineering from The Cooper Union.
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This is another monthly column contributed by Dr. Chin to Nanotechnology Now. The full article appears in our December 2004 Premium Newsletter, along with other outstanding pieces by leaders in the field.
Read all her articles.
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