It was just a matter of time before an investment bank launched a nanotech index. During the bubble years we had an index for everything ranging from Internet ad-related companies to Internet commerce companies. Now we have a nanotech index. Is this a sign of another bubble? Well, it is true that nanotech is overhyped now, but I have no doubt that it will one-day be a pervasive technology that will drive growth in alot of industries ranging from materials to semiconductors to health care. Merrill Lynch's Nanotech Index is an equally weighted index of 25 companies that derive a significant percentage of their future profits from nanotechnology. I encourage you to visit Merrill's site for a copy of the report. Steve Milunovich, Merrill's technology strategist, summarized as follows:
Mr. Milunovich noted that there are two significant differences between the Internet and nanotechnology. "Unlike the Internet, significant intellectual property and patents are barriers to entry, and yet barriers to adoption are low."
Nanotechnology is the science of fabricating things smaller than 100 nanometers. One nanometer is one-billionth of a meter. Merrill Lynch believes nanotechnology is the next logical step in miniaturization and that it is only a matter of time before the impact is felt in many industries. "Building at the nano-scale enables new interactions in materials, semiconductors, and biological agents," said Mr. Milunovich. "The new scale allows manipulation on the cellular level, which should enable new discoveries in pharmaceuticals, biodefense, and many healthcare industries."
I am not a nanotech guy, but IMHO, I have no doubt that nanotech will be big someday and it is really only a question of when it will happen. While I am not actively pursuing this from a VC perspective now, I am going to track this index for personal interest to get a better understanding of what companies are doing with nanotechnology and how they perform over time.
Update-Rich Skrenta suggests visiting the Topix Nanotech page for those interested in daily updates which are not heavily research oriented.