Collaborating for Profits in Nanotechnology

HE economic news in California has been pretty bleak lately. Its businesses, small and large, are becalmed by the recession. The state has taken to issuing i.o.u.’s in the wake of political wrangling over how to resolve a $26 billion budget deficit. Most ominous, the state’s once-great public universities and its community colleges and local schools face budget cuts that amount to critical surgery.

Yet in the midst of all that, there is a promise for the future in the collaboration by California’s university research centers, small companies and venture finance firms in an emerging area called nanotechnology.

Working with materials that are a thousandth the diameter of a human hair, nanotechnology companies do not produce finished products in any one industry. Rather, nano particles improve performance and open new possibilities in activities as varied as water purification, biomedicine, battery power, environmental repair and agriculture.

The universities have been essential in this development process. In some cases, they make direct equity investments in start-up companies. Other times, universities grant licenses to their research and give small companies access to expensive laboratory equipment in return for user fees. And some universities have set up incubators where small companies develop technological products and processes.

Why are universities investing scarce budget cash in start-up companies? “Partnerships with private industry are a way of making this new technology available for public benefit,” said Leonard H. Rome, interim director of the California NanoSystems Institute at the University of California, Los Angeles. Also, in times of strained budgets, such partnerships bring needed funds. The NanoSystems Institute, Mr. Rome said, “has attracted more than $350 million in research and development grants from industry.”

Moreover, the new nanotechnology industry demands interdisciplinary collaboration. “The medical school needs to be collaborating with the engineering school,” said Mr. Rome, who is also senior associate dean of research at the university’s School of Medicine. In fact, the institute was first authorized in 2000 as part of a $100 million grant from the state of California to spur university research.

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Examples from several universities and fledgling companies demonstrate the potential. NanoH2O Inc., for instance, uses nano materials to improve the performance of reverse osmosis membranes in making dirty water clean or in desalination. Two years ago, the company licensed the membrane research of Eric Hoek, a professor of environmental engineering at U.C.L.A. Then it leased lab space in the NanoSystems Institute, which opened in 2007, because being at U.C.L.A. allowed the company to use expensive electron microscopes and other equipment.

“Being able to use the core facilities of the university couldn’t help but accelerate our progress,” said Jeff Green, chief executive of NanoH2O. It also helped attract $20 million in venture capital from Oak Investment Partners and Khosla Ventures. Now, NanoH2O is moving to a factory where it can manufacture membranes composed partly of nano-size elements of alumina and silicon. The membranes filter out salts and impurities yet allow water to flow faster, thus saving energy in desalination or water reuse processes.

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