Top Down or Bottom Up…or Both?

I had the opportunity to attend two excellent meetings last Spring – the Nanotech Commercialization Conference in Winston-Salem, NC (hosted by the NanoBusiness Commercialization Association),  and the Lux Executive Summit in Boston, MA.  The NanoBCA meeting was a rich mix of constituencies including small companies, investors, government (Federal and State), universities and some corporations, whereas the majority of the Lux Summit attendees represented an A to Z of representatives from major international corporations, quite a different audience and perspective.  Both were well organized with plenty opportunities for networking.

Given the current climate, emerging companies often need to partner with or be acquired by larger companies in order to establish fulfillment channels or production facilities that are not readily financed. Understanding what makes these large companies tick is key for nano startups as they chart their path to success.

What are some of the big company perspectives we heard at the Lux meeting, in presentations and discussions?

1. The world has changed – and not always in the way we expected even two years ago.  North America will surpass Saudi Arabia as an oil producer and has abundant natural gas, but rising exploration and production costs of $30 per barrel will keep prices high. American coal is being exported to Europe in record amounts even as US coal plants shut down.  Cheap energy is shutting down alternative energy. Climate change patterns mean that droughts are creating unexpected regional water shortages. These create opportunities for, and threats to, nano companies.
2. The economic crisis has tightened payback perspectives so that corporations are more interested in shorter term results, which leads in turn to them being more interested in startups rather than in supporting longer-term academic research.  “Technology Scouting” has been replaced by “Growth Scouting”.  The Growth Scout challenge is how to make a significant difference in a large corporation turnover by acquiring small businesses?
3. Open innovation: some companies get it, some don’t.  The ones that get it tend to be the largest corporations.
4. Opportunities occur in unexpected places such as bio-based synthesis, construction materials and yes, solar (inverters, micro-inverters, financiers, and installers).
5. Partnering is critical to success, and interestingly the “Alpha Partner” who makes it all happen may not be the company with the most to gain financially, but is the company that has the drive and ability to form the coalition necessary to bring the product or service to market.  To paraphrase some great insights, “partnerships are about access not control (Dow Corning), and you need to “go where the action is…and don’t go alone!” (DSM).

I had the privilege of serving on the recent National Academies’ review of the National Nanotechnology Initiative (NNI). One of our tasks was exploring the NNI’s role in encouraging commercialization.  NNI facilitates the genesis of new nano companies – from Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) funding to the many accessible resources at National Science Foundation (NSF) centers of excellence as well as specific initiatives like NSF’s i-Corps. Beyond this is their role in education and dissemination of information. This is a highly important aspect and the availability of information on Signature Initiatives and other projects will help “Growth Scouts” identify the technologies and partners they need to meet their strategic goals. 

So the answer to the question in the title (Top Down or Bottom Up…or Both?) is: “all of the above – and more!”

Potential partners need access to information on who is doing what; this is aided by NNI and by knowledge disseminated by Lux and others that can help identify leads to practical investment opportunities for corporations.

We especially need meetings like the Nanotech Commercialization Conference and the Lux Executive Summit to showcase opportunities and allow the parties involved to understand each other’s needs, objectives, and current status on an ongoing basis.  This status and the requirements change regularly, for example in the availability/unavailability availability of IPOs, and the relative importance of intellectual property versus a revenue stream.  New business generation really is a contact sport…and these meetings present great opportunities to make meaningful contact!

Alan Rae is the CEO of the NanoMaterials Innovation Center.