B.C.'s nanotechnology companies will be ripe for takeover by outside interests unless they obtain strong local investment, says the president of a leading Vancouver nanotech firm.

Geordie Rose, president and CEO of D-Wave Systems Inc., which builds superconducting quantum computers, says B.C. nanotech investors must be prepared for failure - and spend more money than they would with a conventional company.

"The general trend is a company in high-performance technology in B.C. grows to a certain point ($30-$40 million in revenues) and then gets acquired," says Rose. "That's not good for the long-term (economic) health of the region."

For something completely new to grow and succeed, he says, investors must put away their desire for certainty because it could undermine the industry's growth.

Bayne Stanley, Business Edge
D-Wave's president Geordie Rose displays a quantum chip.

The National Research Council (NRC) describes nanotechnology as the application of science and engineering at the atomic scale.

It enables scientists to build new organic and inorganic materials and devices at the molecular level, ranging in size from one to 10 nanometres. (A nanometre is one-billionth of a metre.)

Scientists contend nanotechnologies will result in sweeping changes in medicine and biotechnology, energy and the environment, and computing and telecommunications, among other sectors.

Rose says investors should be prepared to wait a long time for a return on their dollars. He estimates the biotech sector took 10 years to emerge and nanotechnology could face a similar evolution.

"It's absolutely irrevocable that it will happen, and it will be immensely important to all things we do," says Rose, an engineer who holds a doctorate in theoretical physics. "What's unclear is when and how it will happen."

However, Uri Sagman, executive director of the Canadian NanoBusiness Alliance, which aims to establish nanotech hubs and promote nanotechnologies in Canada and internationally, says it "may not be such a bad thing" if large companies dominate the market early, enabling startups to skip the venture capital stage.

He disagrees with Rose's argument that investors should be willing to wait longer than usual for a return on their investments. Although nanotechnologies are drastically different from other technologies, their commercialization trajectories are not, he says. Some will go to market relatively quickly while others will take longer, with the timeline dependent on what is being developed.

"You have to address (nanotechnologies) to an existing market," says Sagman, adding firms will have to rely on traditional strategies.

According to the Canadian NanoBusiness Alliance, more than 130 Canadian organizations are involved in nanotech. Researchers estimate B.C. accounts for 20-25 per cent of Canada's nanotech activity.

The alliance is attempting to "transition" research and development to the public sector from the private sector, says Sagman.

To succeed, nanotech companies have to demonstrate an ability to manufacture products and produce a cost saving, he adds, but there's currently not enough interest from large investment houses.

Unlike most other countries, there's no "national initiative" in Canada to encourage commercialization of nanotech sectors, Sagman notes. "Canada is off the radar."

However, the federal government continues to tout Canada as a potential world nanotech leader. The National Institute for Nanotechnology (NINT) will open a new $40-million research facility this fall in Edmonton. The centre is jointly funded by the federal and Alberta governments and the University of Alberta.

D-Wave's Rose says his firm does business with many governments and large corporations. Although it has received some federal funding, most has come from California's Silicon Valley and San Diego.

Government funding is suitable for basic research, he adds, but it's nowhere near sufficient for commercialization of nanotechs.

"You're on a different playing field when it comes to raising the amount of capital that you require," says Rose.

Denis Connor, chairman of the board of Angstrom Power Inc., a Vancouver-based micro-fuel cell company that utilizes nanotechnology in its products, says D-Wave is one of the few B.C. nanotech companies that has achieved a measure of commercial success.

Nantotech's evolution is in "its early stages," Connor adds. "There's really no company that I'm aware of, here in B.C. at least, that has much of a leg up."

He predicts nanotechs will eventually have a large economic impact in the province. To succeed, he adds, companies must ensure that they have solid, valuable technology that has good intellectual property protection - "because it's a technology play initially."

Companies must also ensure they hire people who are good at basic research but also have a strong commercial bent and are able to focus on a particular project.

"It's going to be an area where there's going to be a lot of investment and there'll be some success, but it's all going to depend on how good the people are, how good they are relative to other places and how well they're funded," says Connor, former head of the Science Council of British Columbia.

Connor, who holds a doctorate in electrical engineering from the University of British Columbia and sits on Premier Gordon Campbell's technology council, says most federal money for nanotech is going to Alberta, because Premier Ralph Klein's Tory government is matching Ottawa's funds.

Michael Alldritt, an industrial technology advisor with the NRC's industrial assistance program at UBC, says the problem with nanotechnology is that it's not just one technology.

"It is many technologies that have impacts on many industries," he says.

Alldritt foresees nanotech demand in B.C. from forestry and mining companies.

Forest firms will be interested in nanotechs that increase wood's durability, while mining companies will seek assistance with environmental matters.

According to Alldritt, four B.C. universities - UBC, Simon Fraser University, the University of Victoria and the University of Northern B.C. - and 120 lead researchers are developing nanotechnologies.

At SFU, 4D Labs is working on designing, developing, demonstrating and delivering advanced materials and nanoscale devices related to clean energy, information technologies, the environment and health care. Alldritt says many firms straddle the line between designing nanotechs and including them in larger products.

Several B.C. companies are working on a range of new technologies. Applied Microsystems develops sensory and measurement systems while JGKB Photonics builds fibre-optic components, although the company does not view itself as a nanotech. Precision MicroDynamics produces motion-control systems while Zymeworks bills itself as a biocatalyst for pharmaceutical and industrial applications.

According to the Canadian NanoBusiness Alliance, Vancouver is developing a nanotech cluster that specializes in energy. Montreal boasts most of the country's nanotechs - 40 per cent - while specializing in information technology and communications, chemicals and materials, and medicine.

Toronto ranks second in Canada, accounting for 25 per cent of organizations. The Ontario capital has clusters developing in medicine, chemicals and materials. Ottawa is third in the competition to develop nanotech firms, accounting for 15 per cent of the country's organizations. Edmonton, home of the new NINT facility at the U of A, is tied in fourth with Vancouver at 10 per cent.

Alldritt predicts some nanotechnologies will take five to 10 years to become commercially viable while others will take 15-20 years. Many of B.C.'s so called nanotechnology companies are actually working at the microtechnology level.

"The problem is getting from science to technology," says Alldritt. "A researcher interested in science can't always convert (something) into a commercial venture."

(Monte Stewart can be reached at monte@businessedge.ca)