Here is the step-by-step procedure that my firm, The Nanotech Company, LLC, uses to analyze a public or private nanotech company.

First: We analyze Executive Summary, Business Plan, Annual Report and most recent SEC filings – We review and make a basic assessment of the company based on these documents. This is an art honed by reviewing hundreds of early- stage business plans at every stage of development, and usually weeds out 75 to 95% of all businesses at the venture capital level. For a more seasoned public company, this analysis brings us to a basic understanding of the science, technology and business of the company, an overview of basic investment criteria and a basis for knowing who the company’s customers and competitors are or are likely to be. We proceed, assuming a project has passed this cursory review by one of our researchers and is found strongly interesting on some level.

Second: Science – The Nanotech Company, LLC draws on seven internal scientists (including National Academy of Sciences members and a Feynman Nanotechnology winner, as well as a Japan Prize winner) and additional consulting scientists to first determine whether a company has sound science that poses opportunity for relatively near-term commercial exploitation. If a company is unable to pass this common sense test on both counts, science and commercialization potential, there may be no reason to proceed further. Without the filter of highly qualified scientists, you are at a disadvantage to the pros, but you can still compete adequately simply by reading and researching commentary and input by legitimate scientific sources, such as leading university and learned journals, and getting confirmation through respected high tech securities analysts in the field. Goldman Sachs, Lehman, Bear Stearns, Alex Brown or Merrill Lynch (and the like) analysts are not perfect, but wandering into science fiction or missing the commercialization date of a technology by half a decade or more is not likely to be one of their mistakes. (In the science big picture these analysts’ reports can be most helpful to confirm other research you have done.) On private equity deals or investing in venture capital startups, I strongly encourage you to become your own expert as an Angel (more on this in another chapter), or align yourself with a VC firm with proven nanotech expertise.