2009 Nanotech Venture Capital: Healthcare and Life Sciences Provide Life Support

December 30, 2009 | State of the Market Report

Over the last 24 years, venture capitalists (VCs) have poured a cumulative $6.2 billion into start-ups developing emerging nanotechnology. However, the recession of 2008 dried up the flow of capital. To quantify the damage and to analyze the latest trends, we studied our database of primary interviews with start-ups, interviewed 15 of the top VC firms that have invested in nanotech, and found that overall investments fell 42% relative to 2008, to $792 million. However, the healthcare and life sciences sector was the lone bright light in the darkness, as it grew 42% to $404 million, while deals in the manufacturing and materials and energy and environment sectors deteriorated 78% and 69%, respectively. With 53% of VCs predicting investments to decrease or remain flat in the near term, nanotech VC likely peaked in 2008 at $1.4 billion. Despite the dim VC outlook, nanotech will survive, as the new landscape forces entrepreneurs to embrace capital efficiency and rely on old-fashioned creativity, government funding, and strategic partnerships.

Coverage Areas

  • Accelerating Materials Innovation
  • Nanotechnology

Table of Contents

  • Executive Summary
  • Landscape
    Nanotech venture capital (VC) funding fell 42%, causing start-ups to panic and many to question the future of nanotech VC.
  • Analysis
  • Outlook
  • Endnotes

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