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Blunt advice on nanotechnology investing

We at Foresight are often asked for advice on nanotechnology investing, which we are not qualified to give, so we refer folks elsewhere. Most sources of nanotech investing advice are boosters, so it’s also useful to hear from those taking another view. Over at Nanotechnology Now we get some unusually blunt comments from columnist Pearl Chin, whom some of you have met at Foresight events. An excerpt:

My point is that investing in nanotechnology is a lot more difficult than investing in publicly viewable nanotechnology indices. If it were that easy, we’d all be making money right now investing in them. However, they are currently underperforming the S&P 500 and it will be some time before they outperform it if ever. It will not be easy money and it will not be made tomorrow because those small companies (IBM excluded) listed on the indices are immature…

The ones who will be making money on nanotechnology are not the people investing in those nanotechnology mutual funds or according to those indices. That money has already been made. Those early private investors have just dumped that stock as a public listing on the unsuspecting public sucker so they can make a return on their investment.

Read the whole thing if nanotech investing is on your mind. You may agree or disagree, but it’s a perspective to be aware of. Although I know little about investing, even I’m aware that it’s very risky to invest in companies which are not yet making profits, whether they are public companies (i.e., they sell stock to the public) or not. Better to leave those risks to angel investors and venture capital firms. —Christine

4 Responses to “Blunt advice on nanotechnology investing”

  1. Phillip Huggan Says:

    Because of twin deficit concerns, tax base erosion via tax-cuts (and a steadily rising debt) I wouldn’t invest any money in USD denominated holdings at present.
    Nanotechnology investments are risky. Often the nanotech companies are underfunded and big players are just waiting for them to burn through their capital to snap them up at a premium.

    Existing materials science or chemical or semiconductor companies with nanotech exposure may be the safest play for now. A BASF or a Siemens. 3M or IBM if it must be a US asset. Of course, there are lots of nanotech killer apps waiting and playing it safe will miss out on the big money.

    I’d like to invest in a company like Nanosolar, but like many companies they are private.

  2. Phillip Huggan Says:

    Another comment (sry just thought of it after sending the last post), there are many universities with nanotechnology-related programs where it is stated they are looking for commercial partners ($$) for their nanoproducts. Going through University websites one by one should yield some nanopotential.

  3. Pearl Chin Says:

    There are ways to invest in private companies. If you like one, there is no reason not to call them directly but the money you are investing should be worth some of their time to speak to you. You may come in as a private investor or an angel investor and there may be some SEC eligibility rules. The other alternative is to become part of an investment fund vehicle, whether it be angel investment or venture capital which also has some eligibility rules. The stakes are a bit higher here but the difference between the two is scale and often the approach by which they manage their investments or invested companies. Then there is always the rather vaguely defined “friends and family” route. You could loan the money and possibly have a situation where the debt is converted to equity at a later date. All situations should consult legal advice.

  4. Shayan Naveed Says:

    Investing in private companies involved in nanotechnology in my view could be quite risky. Most companies are just trying to make profit and working for a nanotechnology R&D center as a marketer and dealing with private companies, there always a paradigm shift. Also not to mention, the goals and objectives are different.

    The goals of R&D centers are almost always for scientific goals to better man-kind and investing in these programs/centers would be a way better and profitable venture than going for the companies. The investors would be going straight to the source and save costs as well. Also R&D centers or university labs always require partnerships and investments to fund their work. It’s a win-win.

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