Nanotechnology funding and the $18 billion pair of pants

Filed in archive Investing on January 26, 2006

A new report on the current state of nanotechnology funding and development finds a big gap between the commercial impact of nanotechnologies and the $18 billion in funding nanotech has received since 1997. Its conclusion that commercial applications to date haven' t justified the multi-billion dollar investment is clear from the report' s title:

"Where Has My Money Gone? government Nanotechnology Funding and the $18 Billion Pair of Pants"

The pants are a reference to Nano-tex treated pants that resist spills and stains--one of the most recognizable commercial applications of nanotechnology to date.

The report, prepared by Cientifica, a London-based market research group specializing in tracking developments in nanotechnology, is based on interviews with government funding agencies and researchers around the world. Commenting on the findings, Cientifica CEO Tim Harper said, "These people speak a very different language from that of Wall Street, and the story that emerges is very different from the hype and over expectation that we have come to associate with nanotechnology."

Among the report' s conclusions:

Global government spending on nanotechnologies totaled 4.8 billion US dollars in 2005.

Japan spends three times as much as a proportion of its gross domestic product as the United States.

Government nanotechnology funding takes an average of two to three years before it even reaches the lab.

Governments have deep pockets but short arms when it comes to handing out research funds.

Much government spending is concentrated on research areas with little immediate commercial impact.

The true impact of nanotechnology will only start to be felt from 2007 onwards.

Their conclusions are generating a buzz in the nanotech community, especially among potential investors. But what the headlines don' t address is the extremely long lag time between government funding of a university lab project and the commercialization of resulting products. The report covers less than ten years, and if you look at the development of any large-scale technology (electronics, computers, wireless, etc.) it' s not uncommon to find a much longer lag between initial investment in the lab and commercialization in the marketplace.

Opponents of nanotechnology cite many reasons why we should cut government funding; let' s hope short-sighted desire for a quick return on investment doesn' t become one of them.