EMERYVILLE, Calif. Dec. 18, 2002 — Charlie Janac thinks his company, Nanomix Inc., could be nanotechnology’s first hit company — that is, once people figure out how to pronounce its name.
Nanomix, sounds like “genomics.”
“Our goal is to become so famous it’s not even a question,” said Janac, the company’s chief executive.
Nanomix, formerly Covalent Materials, is the brainchild of University of California, Berkeley, physicists Alex Zettl and Marvin Cohen. They developed a way to build carbon nanotube structures that act as chemical sensors. They are also working on developing hydrogen fuel tanks. Their primary strength has been using theoretical modeling to predict the behavior of nanostructures.
Janac thinks the company’s modeling expertise will make Nanomix a model for success in the nanotechnology business. In fact, Janac said, Nanomix might be for nanotechnology what Genentech Inc. was for biotech: the company that shows how to commercialize the science.
“Somebody has to create the model, and we think we have a rational model for getting from the lab to engineering to production to revenues to profit,” Janac said. It helps that Janac has an affinity for hard science (as a young researcher, he invented the backsheet for disposable diapers. He still grouses that his material of choice was passed over for something hundredths of a cent cheaper).
Nanomix has a long way to go before it can become nanotech’s Genentech. It’s out of the lab, but that’s just the first milestone. Next on the list: shipping test sensors to potential customers. That should happen in the first quarter of 2003. If it continues to hit its goals, Janac said, Nanomix will see its first revenues in 2003’s fourth quarter.
But big hurdles remain.
“The science is based on virtual reality — theoretical modeling — actually proving out in physical reality,” said Brock Hinzmann, technology navigator at SRI Consulting. “Engineering often takes a lot longer than what people think it should.”
Hinzmann said, too, that even if Nanomix nails the engineering and production issues, the company still has to figure out its business model, especially if it plans to sell $50 sensors into a market used to paying $3,000. That, of course, assumes it can get companies to adopt its technology, rather than those of competitors both inside and outside the nano space.
Hinzmann does think that Nanomix has a great scientific team, and said it may well get to market first.
Marc Rothchild, a senior analyst at San Francisco Consulting Group, said he believes that despite its challenges, “Nanomix has a good possibility of succeeding.” Its sensing technology has multiple applications, and he said the company has a good grasp on how to manufacture its products. “It’s just a matter of proving it.”
Janac is aware of the issues, and cautions that it will take Nanomix three to four years to generate positive cash flow. Nevertheless, he said, “we are probably going to be the first company to ship a complex nanodevice.”
Nanomix signed up some believers in September, landing a second round of funding for $9 million. Apax Partners and Sevin Rosen Funds led the round. EnerTech Capital Partners participated, as did first-round investor Alta Partners. Getting a second round of funding in the current market is significant, particularly for a nanotechnology firm.
“This round of funding gets us to production, or close to production, of our first product,” Janac says. “We’re taking the science out of the lab and into testing, real environments and market validation.”
The second round? Janac has a slide showing that it took nine months, 145 meetings with 41 venture funds, 21 different iterations of the company’s investor presentation and three term sheets. He estimates that he spent 80 percent of his time on closing the round. “I was talking to a VC the other day, and my wife asked me, ‘Why are you still talking to VCs?’ I told her, ‘I just can’t go cold turkey,'” Janac joked.
The truth is, Nanomix will eventually need more funding, at least some of it from strategic corporate investors. In particular, it will need to fund its work in hydrogen storage, which is where it thinks it has huge long-term potential. The company’s first prototype hydrogen fuel cell is hefty, and could only power a projector for a couple of hours. But it’s working on a new prototype.
For now, nanosensors are the focus of the business. If the model bears out, people will learn how to say Nanomix.