FORBES/WOLFE Nanotech Weekly Insider: AUG.20.2004 by Josh Wolfe (email: nanotech@forbes.com) What do rats, stats, gossip and a Polish-American have in common? Read on. If you're a subscriber to the monthly report, then your August issue of the Forbes/Wolfe Nanotech Report should've arrived a few days ago. And September's issue is well underway with a Guru Q&A that's one of my all-time favorites and one of the most insightful we've done. If you're not a subscriber, sign up today: https://w1.buysub.com/servlet/OrdersGateway?cds_mag_code=FWN&cds_response_key=ITM03E4 Polish-American and father of semantics, Alfred Korzybski said, "There are two ways to slide easily through life: to believe everything or to doubt everything; both ways save us from thinking." Now, we all think through problems in different ways. And we all see the world through different lenses. How do you see things? Try answering this: It's 12:00pm and there are a few rats in a room. The population of rats doubles every minute. And after one hour, at 1:00pm, the room is entirely filled up with rats. At what time was the room half-full? Before I give you the answer, I'll share some interesting stats and then comment on our Nanotech Rumor Mill. First stats. My venture firm Lux Capital recently spun-out an entirely independent research and advisory firm, Lux Research, which this week released its nearly 700 page, two-volume annual monster "The Nanotech Report 2004". The Wall Street Journal and CNBC covered the key findings. Here's a few choice stats from the folks at Lux Research, which they've made available at the link below: https://www.globalsalespartners.com/lux/ === (1) Governments, corporations and venture capitalists will spend more than $8.6 billion worldwide on nanotechnology research and development in 2004. (2) National and local governments across the world will invest more than $4.6 billion in nanotechnology R&D in 2004. We expect 2004 will be the last year that governments outspend corporations on nanotechnology as activity shifts from basic research to applications development. (3) The U.S. government will spend nearly twice as much on nanotechnology this year as it did on the Human Genome Project (HGP) in its peak year. In 2005, the National Nanotechnology Initiative will surpass the HGP on a cumulative basis. The U.S. has now appropriated more than $3.16 billion to fund nanotechnology R&D since 2000 and is proposing $982 million in new funding for FY 2005. (4) Established corporations will spend more than $3.8 billion globally on nanotechnology R&D in 2004. (5) There is no bubble in nanotech venture capital funding, despite widespread reports to the contrary. VC firms invested just $79 million into nanotechnology companies in the first half of 2004, down from annual totals of $325 million in 2003 and $386 million in 2002. Based upon current fundraising activity, we expect VC investment to total approximately $200 million in 2004. (6) Approximately 1,500 total companies worldwide have announced nanotechnology R&D plans. Eighty percent of them -- approximately 1,200--are start-ups, 670 of which are in the U.S. (7) Media coverage of nanotechnology -- both positive and negative -- is increasingly exponentially. Mentions of the word "nanotechnology" in the popular press rose from 190 in 1995 to 7,316 in 2003; we predict more than 12,000 mentions in 2004. === Now onto the *Nanotech Rumor Mill*. Gossip. It's got a special place in our hearts. Harvard's evolutionary psychology guru, Steve Pinker, said it best: "Gossip is a favorite pastime in all human societies because knowledge is power. Knowing who needs a favor and who is in a position to offer one, who is trustworthy and who is a liar, who is available and who is under the protection of a jealous spouse--all give obvious strategic advantages in the games of life. That is especially true when the information is not yet widely known and one can be the first to exploit and opportunity, the social equivalent of insider trading." But alas, for all those who write in guessing or demanding answers to the Nanotech Rumor Mill, they will NEVER be revealed here before they are public information. Subscribers to our monthly report get an advantage and the clues that all but give it away. Now back to the rats. What was your answer to the question above? What time was the room half-filled with rats? Over lunch this week, a wise fund manager suggested there are three kinds of investors--and they look at the world in either "points", "lines" or "curves". The "point people" need well-defined starting points and don't deal well with abstract and dynamic concepts. They'd say that the rat question was incomplete and they would ask for more information. As investors they look at a fixed point in time or a fixed point in a growth curve and make decisions based on that point. They're also very weak with forecasts. "Line people" are a little better. "Line people" are most likely to guess that the room of rats was filled at 12:30pm. They can make linear approximation and are good at situations where the past is a consistent predictor of the future. This is the majority of investors. And unfortunately the minority of situations. The past is very rarely a good predictor of the future--especially with stock performance. But remember the rats weren't multiplying linearly, they were doubling every minute. Which brings me to the "curve people". These are the rarities. These are the non-linear, out-of-the-box thinkers who understand exponential curves, compound growth rates and why the king got suckered in the fictional legend of how Chess was invented (you remember: the inventor asked the king for a "simple" reward-- a mere grain of rice on the first square, two on the 2nd, four on the 3rd and so on, until he'd bankrupted the king). The correct answer to the rat riddle??? 12:59pm. One minute before 1:00p, there were half as many rats as there would be at 1:00pm. Subscribers to our premium monthly can note that stocks in our Nanosphere portfolio are now up +103.37% since inception (March '02) versus the Nasdaq: +5.11% and S&P 500: -1.40%. https://w1.buysub.com/servlet/OrdersGateway?cds_mag_code=FWN&cds_response_key=ITM03E4 Monthly Premium Subscribers: To avoid an interruption in service, renew your subscription today, go to www.forbesnanotech.com/renew or click below now: http://www.forbesnanotech.com/renew ========================== NANOTECH QUOTE OF THE WEEK ========================== "The biggest shift we've seen in the last year is nanotechnology moving out of the lab and onto the production line. Nanotech startups are beginning to make money, with revenue ranges between $10 million to $20 million for those at the top of the ranks. They're partnering with established corporations to develop products in a pattern similar to biotech." --Matthew Nordan, Vice President of Research, Lux Research <><><><><><><><><><><><><><><><><><.><><><><><><><><><><><><><> Do you know how to profit in nanotech? Find out in my exclusive monthly Forbes/Wolfe Nanotech Report. Click below to sign-up and get free special reports on my favorite publicly traded nanotech companies, "5 Biggest Profit-Takers of the Nanotech Revolution." Click below for access: https://w1.buysub.com/servlet/OrdersGateway?cds_mag_code=FWN&cds_response_key=ITM03E4 <><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><> ============ ON THE RADAR ============ FUNDING: NANOTECH R&D SPENDING Worldwide research and development spending in the emerging field of nanotechnology should rise about 10 percent this year to $8.6 billion, a research firm said on Monday. Corporations should spend more than $3.8 billion on nanotechnology, the science of building devices on the molecular or atomic scale, reported Lux Research Inc., a New York-based research and consulting firm focused on nanotech. https://www.globalsalespartners.com/lux/ COMPANIES: NANOSYS Nanosys, Inc. today announced that DARPA has awarded a contract to Nanosys and its collaborators to support the development of flexible low cost solar cells. The award has a potential value of approximately $14 million over a five-year period. The initial 12-month Phase 1 of the program will include up to $2.2 million of funding to Nanosys and its collaborators. Additional phases of development will be funded based upon the approval of DARPA. http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/08-18-2004/0002234023&EDATE= NANOTECH: AN INSIDE EDGE Avoid the hype and equip yourself with an advantage over other investors. Get expert analysis and investment advice. Click below to get ahead of the curve now... https://w1.buysub.com/servlet/OrdersGateway?cds_mag_code=FWN&cds_response_key=ITM03E4 SCIENCE: CARBON NANOTUBES Researchers at the National Institute of Standards and Technology (NIST) have discovered that the addition of carbon nanotubes to a common commercial polymer, polypropylene, leads to dramatic changes in how the molten polymer flows. This process eliminates a widespread manufacturing headache known as "die-swell" in which polymers swell in undesirable directions when passing through the exit port of an extruder (a machine for producing more or less continuous lengths of plastic sections). http://www.eurekalert.org/pub_releases/2004-08/nios-cne081304.php COMPANIES: LUNA INNOVATIONS Luna Innovations announced that Dr. Stephen R. Wilson has joined the company as Executive Vice President for the newly-formed Nanomaterials Division in Danville, VA. Dr. Wilson is one of the world's leading fullerene and nanotube chemists and a successful entrepreneur and innovator. A founder and former Chief Scientific Officer with Houston-based C Sixty Inc., a bio-nanotechnology company focusing on medical uses of fullerene antioxidants, he has authored over 200 patents and publications in nanotechnology, organic chemistry, biochemistry, and biotechnology. http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20040817005066&newsLang=en SCIENCE: QUANTUM DOTS Researchers from the Canadian National Research Council have devised a way to use quantum dots -- tiny bits of semiconductor -- to print invisible secret codes onto surfaces like documents. The quantum dots the researchers used in their prototype measured between 3 and 6 nanometers in diameter. A nanometer is one millionth of a millimeter. The method could eventually be used to authenticate valuable documents like passports and certificates, according to the researchers. http://www.technologyreview.com/articles/04/08/rnb_081804.asp?trk=nl TECHNOLOGY: ATOMIC FORCE MICROSCOPY A team of researchers have developed a method that could vastly improve the ability of atomic force microscopes to "see" the chemical composition of a sample, follow variations of the sample, as well as map its topographic structure. http://www.spacedaily.com/news/spacemedicine-04zzb.html COMPANIES: NANOMIX Nanomix Inc., a nanotechnology company commercializing a line of nanoelectronic sensors for industrial and biomedical applications, announced that it has been awarded a $500,000 NSF grant. The Phase II Small Business Innovation Research (SBIR) award will be used to continue Nanomix's development of a medical capnography sensor. Capnography is the measurement of carbon dioxide concentration in human respiration and is a standard of care during administration of anesthesia in the operating room. http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=SVBIZINK3.story&STORY=/www/story/08-17-2004/0002233436&EDATE=TUE+Aug+17+2004,+12:01+PM ORGANIZATIONS: ALLIANCE FOR NANOHEALTH Houston consortium the Alliance for NanoHealth has gotten a vote of confidence from the government, which announced Wednesday it is providing the group with $2.8 million in federal funding. http://houston.bizjournals.com/houston/stories/2004/08/16/daily22.html UNIVERSITIES: RPI Researchers at Rensselaer Polytechnic Institute have been awarded a $1.3 million grant from the National Science Foundation to further develop nanotube sensors for homeland security. The nanoscale chemical sensors are designed to detect toxic gases and chemical warfare agents. http://albany.bizjournals.com/albany/stories/2004/08/16/daily18.html NANOTECH JOBS: Looking for a job in the emerging field of nanotech or have an nanotech opening that you need to fill? Our new site is dedicated to jobs at the intersection of nanotechnology, biotechnology, and information technology. Job seekers can search and apply for jobs, set up job agents, and post their resumes. Employers can post and manage jobs, search resumes, and take advantage of many advertising options on the site. Check out our new jobs site powered by tinytechjobs.com. Hundreds of jobs are posted each day - just visit http://forbes.tinytechjobs.com to register or click on the link below: http://forbes.tinytechjobs.com OPINION: NANOTECH BLOG Keep up with me by reading my personal opinions posted to this website covering issues about the money, markets, science and undiscovered trends behind nanotech: www.forbeswolfe.com or click on the link below: http://www.forbeswolfe.com =================== NANOTECH RUMOR MILL =================== ** SEND ANONYMOUS TIPS TO nanotech@forbes.com ** *Which nano scientist has resigned from of the earliest nanotech startups--to launch a new exciting one? *Which prominent VC has secretly made some angel investments in at least one nanotech company? *Which Forbes/Wolfe power broker has won the prestigious Albert Einstein award to be presented by the Prime Minister of Israel? *Which Forbes/Wolfe power broker has some major news to announce in May? *Which investment bank was going to release a nanotech index right after Merrill Lynch did, but then pulled back and decided to wait? *Which nanotech startup just snagged a CEO who was a VP at a publicly traded nano company? *Which early and prominent nanotech company is in dire need of cash? *Which major public company is rumored to be considering acquiring a nano-pretender? *Which major Life Sciences technology company is about to invest in a nanotech startup? *Which political power player is (surprisingly) rumored to be lending his name to a European mutual fund that wants to focus on nano? *Which nanotech "powerbroker" is teaming with a newly departing nanotech CEO to launch a new company to help startups? *Which giant materials company is currently developing a significant nanotechnology strategic initiative to leapfrog its competitors? *Which other nanotech company founder & CEO just left after it scored some cash? *Which bulge-bracket investment bank Chairman is getting geared up for nanotech? *Which tough young actress has been touring a certain state's nanotech facilities? <><><><><><><><><><><><><><><><><><><><><><><><><><><><><> I want to make this the best newsletter for you, my reader. So let me know what you'd like to see each week and my team and I will do our best to deliver it to you! write to me now at: nanotech@forbes.com <><><><><><><><><><><><><><><><><><><><><><><><><><><><><> ............................................................ FORBES/WOLFE NANOTECH REPORT: AUGUST ISSUE Subscribe Now and Download the August Issue immediately to read these featured stories and more... https://w1.buysub.com/servlet/OrdersGateway?cds_mag_code=FWN&cds_response_key=ITM03E4 *Cutting Through the Nanosys Noise 'When nanotech pioneer Nanosys with-drew its proposed initial public offering in early August, there was considerable happiness among nano-skeptics' *Nano-Catalytic Converts 'That's where molecular chemistry at the nanoscale comes in. As the Boss says, "You can't start a fire without a spark." And you can't change chemistry without a catalyst.' *Thinking Small: In-depth Interview with Ed Braun, CEO of Veeco *Companies to Watch: Nanostellar, Nucryst Pharmaceuticals As always in each monthly issue: * The Nanosphere -- an update on my core nanotech portfolio including company, industry, date purchased, current price and 52-week high. * Word on the Street -- I separate fact from fiction concerning the latest buzz from Wall Street on my nanotech companies and tell my readers whether to buy, hold or sell. * Market Trends -- My latest analysis and insight on opportunities in nanotech investing, and, perhaps more importantly, the pitfalls to avoid. * Companies to Watch -- up and coming nanotech firms with incredible technology that I am watching. These companies could be the next hot IPO or be the next high-profile acquisition by a major industry player. Either way, you will read about them first. * Follow the Money -- your guide to venture capital investing and government grants for nanotech research. Who is getting the money, what they're doing with it and what are their chances of success? No other monthly report precisely targets how trends in nanotechnology affect Wall Street and the investor community. Corporate or multi-user volume discount packages available. Visit this web page for details: https://w1.buysub.com/servlet/OrdersGateway?cds_mag_code=FWN&cds_response_key=ITM03E4 ................................................................ 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