Midwest Nanotech – Hype or Reality?


Tim J. Smith, PhD
Founder and CEO, Wiglaf Pricing

Published April 2, 2003

Scientists in the Midwest US have made significant contributions to nanotechnology, but do these advances present real business opportunities in the region? At the Biomedical Opportunities in Nanotechnology panel discussion during CUBIC 2003 on March 7th, experts from business, investors, support agencies, and universities clarified the reality and challenges of creating an economically vital nanotech community within the Midwest.

The panel leader, John Abrams from Launch Capacity, explored the paradigm that successful new venture creation depends upon the combination of ideas, capital, and markets. All of these are required, yet this paradigm seemed to miss a key ingredient.


On the question of the importance of ideas, scientific advances were clearly insufficient for successful business creation. Sean Murdock of Atom Works mentioned the advances developed in laboratories at Northwestern, UIC, and Argonne National Laboratories. Yet, Tomas Cox from Seneca Partners replied that local academic support makes little difference in new venture creation. Intellectual capital has shown a high willingness to travel to centers of economic activity.

But are the ideas worthy? To this the panel unanimously agreed. To Alan D. Feinerman, PhD, from the University of Illinois at Chicago nanotechnology is exciting science and demonstrates real promise to change the world. Mr. Murdock added that real changes in consumer products are being derived from advances in nanotechnology materials. These include longer lasting tennis balls from Wilson and better coatings for GM automotive. Currently, biomedical nanotechnology is commercializing tools, sensors, and diagnostics. As the field develops with FDA approved therapeutic regimens, nanotechnology will change the way health care is provided.

Mr. Murdock also reminded the audience that the development of these ideas into broad commercial use will take time. Technological advances enter the market in a non-linear fashion, with a slow early market penetration followed by exponential growth prior to entering maturity.


With respect to capital, Prof. Feinerman agreed that early capital infusion is required to commercialize nanotechnology science. The availability of funding from the SBIR aides in the funding process according to Alan A. Harpern, MD, MBA, from Orthopedic Development indicated. Mr. Halpern added that Michigan has deployed money gained from its tobacco settlement to fund companies during the SBIR process. In Illinois however, the tobacco settlement was squandered on tax rebates. On the positive side, Ms. Nancy Sullivan from the Illinois Coalition revealed that Illinois has worked to group firms together and encourage them to share resources with the academic research community.

The sharing of resources approach taken by Illinois does make a significant difference in lowering the capital requirements of nanotechnology ventures. The capital requirements for developing a new venture in nanotechnology are significantly large. Prof. Feinerman pointed out the requirement of a new venture to spend a half million dollars on machinery and a half million on operations in the first year of operations alone. The Illinois approach to sharing resources however saves companies much of this expense and avoids the purchasing of excess capacity.

Yet, funding may not be the major barrier to success. To Mr. Cox, time is the enemy.


New ventures need a clear path to the creation of a viable business and investors demand a clear exit path. In nanotechnology, this path usually includes the ability to create a product that customers must have. Nice to haves simply won’t suffice. Examples of must haves products are those that lower costs, increase revenues, or improve human well being. The creation of these products enables a new venture to become a critical component of another business. When Mr. Cox advises new businesses, he stresses the need to uncover customers for whom the technology will “get in their way” and become a must have.

Uncovering the early market is clearly the key to success for new businesses. Mr. Halpern added that nanotechnology business is about the market, not the technology. He went as far as to iterate that if an organization can’t sell the product, who cares if they can make it. Of these three ingredients to new venture creation: ideas, capital, and markets; markets appear to be the most important.

The Missing Key – Human Capital

While these three ingredients may be necessary for fostering new ventures, they do not indicate the where the new ventures would develop. When Mr. Abrams focused the panel on the issue of success in the Midwest, human capital issues became paramount.

Ms. Sullivan pointed to the ability of Midwest ventures to marry MBAs from two of the top ten global business schools with scientist from the most active nanotechnology academic community. But freshly minted MBAs may not be the right executives for a new nanotechnology venture.

The development of new business opportunities has a greater dependence upon the willingness of experienced business executives to take risks. Well trained, experienced, and developed executives from larger corporations provide more fertile ground for new venture development according to Mr. Cox.

Moreover, new venture executives must be fostered in a risk taking environment. Mr. Murdock reminded us that 90% of new businesses fail. As such, experienced venture executives have often failed in their past two attempts. Dishearteningly, to Mr. Cox and others on the panel, Chicago has a “one strike and your out” mentality. I hope Mr. Cox’s viewpoint proves to be wrong.

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  1. […] Midwest Nanotech – Hype or Reality?Wiglaf JournalScientists in the Midwest US have made significant contributions to nanotechnology, but do these advances present real business opportunities in the region? At the Biomedical Opportunities in Nanotechnology panel discussion during CUBIC 2003 on March … […]

About The Author

Tim J. Smith, PhD, is the founder and CEO of Wiglaf Pricing, an Adjunct Professor of Marketing and Economics at DePaul University, and the author of Pricing Done Right (Wiley 2016) and Pricing Strategy (Cengage 2012). At Wiglaf Pricing, Tim leads client engagements. Smith’s popular business book, Pricing Done Right: The Pricing Framework Proven Successful by the World’s Most Profitable Companies, was noted by Dennis Stone, CEO of Overhead Door Corp, as "Essential reading… While many books cover the concepts of pricing, Pricing Done Right goes the additional step of applying the concepts in the real world." Tim’s textbook, Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures, has been described by independent reviewers as “the most comprehensive pricing strategy book” on the market. As well as serving as the Academic Advisor to the Professional Pricing Society’s Certified Pricing Professional program, Tim is a member of the American Marketing Association and American Physical Society. He holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.