By Jack Mason
Small Times Correspondent
May 6, 2002 -- With a $6.4 million investment announced Friday and a promising production process in its IP arsenal, Nanotechnologies Inc. of Austin, Texas, plans to make nanopowders of very precise and consistent particle sizes.
Nanoaluminum, one of the particles the company can produce with in its plasma reactor, is an excellent ingredient in "energetic materials" such as solid-fuel rocket propellant or high-tech explosives like the new generation of "thermobaric" bombs used in Afghanistan to destroy caves or underground facilities.
The company's plasma process is its trade secret weapon. In a few thousandths of a second, a reactor zaps a rod of solid material with a massive pulse of electrical energy, heating it to 50,000 degrees Celsius.
In another blink of the eye, the gas of vaporized material cools. This rapid cooling, or quenching, is how the company controls the size of the resulting nanoparticles and ensures that the most particles are close to the desired dimensions.
How the company collects the nanoparticles, which it can make in a range from 10 to 100 nanometers, is a trade secret.
With Friday's investment from a group including Techxas Ventures, Castletop Capital, Convergent Investors and small tech VC specialists Harris & Harris, Nanotechnologies Inc. is crossing the threshold from development company to commercial startup.
Co-founder and President Dennis Wilson, a former University of Texas mechanical engineering professor who started the company in 1999, says the strategy is to make high-value, custom materials that other nanoparticles companies can't.
As he explains, the nanoparticles other companies produce often stick together into clumps of atoms akin to clusters of grapes. Wilson says that the particles his company makes stay well-separated, like atomic-sized grains of sand. The benefit of such well-defined nanoparticles include greater surface area in chemical reactions or catalysts as well as more predictable performance and easier incorporation into composite materials.
Harris & Harris President Mel Melsheimer has been working on the investment for nine months and says that Nanotechnologies Inc.'s goal to make very pure, customized nanoparticles is critical. He notes that the company "is mindful of the pitfalls of becoming a provider of chemical commodities."
In addition to explosives applications, Nanotechnologies Inc. expects to create ingredients for clear, scratch-resistant coatings as well as metallic powders for printing electronic circuits with inkjet technology.
According to Melsheimer, the flexibility of Nanotechnolgies' process is its chief virtue. "This can be used to create all kinds of nanoparticles, including metals, oxides and nitrides," he said. To date, the company has produced nanoparticles of alumina, silver, titania, zirconia and niobia among others. Wilson says that the process can also make borides and carbides. Exotic materials such as amorphous carbon and diamond are also possible.
Melsheimer says that Harris & Harris, which took a $750,000 stake in the company, was attracted to the investment opportunity because his company believes Nanotechnologies Inc. can make high-value nanopowders economically. Moreover, he believes the company's capital expenditures requirements "were also attractive."
For investors, nanomaterials companies represent one of the most immediate commercial applications of nanotechnology. However, nanomaterials makers are invariably part of a supply chain.
Satisfying the testing, evaluation and production needs of potential partners can be a slow and uncertain path. As a supplier of a new, disruptive materials, a nanoparticle maker may have to wait for an industrial customers to transform production processes to take advantage of the performance enhancements nanoparticles offer.
Nanotechnologies Inc. can't say who their customers will be, citing nondisclosure agreements with at least 15 companies, some of them Fortune 100 members. It can, however, say that the combustibility of its nanoalumina has been qualified by a government lab in preliminary tests.
Wilson says that the company traces back to three years of brainstorming on how the basic physics developed while he was at University of Texas lead to the plasma process
"I didn't know how to write a business plan back then," says Wilson, who has three NASA research fellowships and two from the U.S. Department of Energy to his credit.
But the promise of the plasma process, now protected by a combination of patents and trade secrets, was enough to attract seed money from family and friends. That lead to an initial round of financing in April 2000 from Convergent Investors and Crossroads Systems Inc. founders Brian Smith and Dale Quisenberry, which netted the company $4 million.
Last year, Wilson persuaded Denny Hamill, a physicist with three decades experience developing and marketing products with 3M to serve as the company's vice president of business development. And today, the company has hired Gary Pankonien as its new chief executive. Pankonien was previously chief operating officer Caleb Technologies, an Austin-based sofware company.
Harris Marcus, a professor of metallurgy and materials engineering at the University of Connecticut, is familiar with Wilson and his work from their years together at the University of Texas. As a member of Nanotechnolgies Inc.'s scientific advisory board and director of UConn's Institute of Materials Science, Marcus is also knowledgeable about the company's plasma process.
While he says the process is likely to produce commercially useful nanoparticles at lower costs than by chemistry, what he finds most interesting are the opportunities beyond the immediate horizon.
"This approach has the distinct advantage of being able to create entirely new types of nanoparticles, perhaps out of composites or unstable compounds," said Marcus. "It could produce nanoparticles that would be virtually impossible to create by chemistry."
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