Posted: June 11, 2008 | |
Are Venture Capitalists Misplaying Nanotechnology? |
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(Nanowerk News) An brief article in Industry Week argues that nanotechnology venture capital funding is out of sync with returns: | |
If you examine who is delivering the majority of venture capital returns in nanotechnology, it is application-oriented life sciences companies, says analyst firm Lux Research. Yet venture capitalists are consistently providing more funding to companies in other areas. | |
"Healthcare and life sciences companies have accounted for a staggering $1.68 billion of the $2.57 billion total valuation of nanotech start-ups at IPO [initial public offering]," says analyst Jacob Grose. "Correspondingly, revenue multiples at IPO have been an order of magnitude higher for the healthcare segment [206.2x on average] than in the four other segments we track, yet last year more nanotech VC deals closed in manufacturing and materials than in healthcare and life sciences." | |
That's because "gas prices and global warming make the crises in energy and the environment really visible," Grose says. However, he notes, the need for beneficial nanomedicine remains strong. | |
"So there are great investment opportunities -- and sketchy ones -- in both areas, and you really need to examine each company's scientific value closely to find value." | |
That's just one of the findings in Lux Research's new report, "How Venture Capitalists Are Misplaying Nanotech." The report also notes: | |
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Jurron Bradley, who leads Lux Research's nanomaterials practice, says that start-ups that are tailored toward a small number of specific applications "tend to be" more successful than firms developing broader platforms with no clearly defined purpose. |
Source: Industry Week (Jill Jusko) |
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