2009 Nanotech Fortunes Update

A 2009 Update to Nanotech Fortunes: Make Yours in the Boom; Winning Strategies (2005)

Revisiting in a Serious Recession or Depression


By: Darrell Brookstein, Author of Nanotech Fortunes
Managing Director
The Nanotech Company, LLC
San Diego, CA
Phone: (in U.S.) - 858 794 0848
Email: darrell@Nanotechnology.com


December 7, 2008

People at the highest levels of authority in our government, commercial and investment banks, hedge funds and leading corporations had no idea of risks involved in what they and their policies were doing; simple, basic understandings that should be expected of any fiduciary. Combined with a failure of oversight (not lack of regulation), greed, incorrect response to the problems based on incorrect assumptions, we are where we are today: in a serious, 18-30 month recessionary period, that can turn into either a decade plus long Japan-like situation (1990 forward) or international depression with just a few more missteps.

Given where we are, new paradigms that we detail for each group below are required for small tech-interested investors, brokers and investment banks, hedge funds, venture capital firms, angels, publicly traded and private companies and professional services providers in the space.

In Nanotech Fortunes, written in 2004/05, Chapter 15 – Six Steps to a Nanotech Fortune (pp. 144-193) was the longest and most important section. When the first copies rolled off the presses in May 2005, we felt that the first nanotech investment boom had not occurred and was unlikely to begin before the mid-2006 to 2009 timeframe. In late 2005, I noted we had a serious decline ahead in the equities in general, tech stocks specifically and nano and microtech-related stocks most seriously. Reiterating this again more strongly in December 2006, our Nanotechnology.com Small Technology Stock Index (the strongest related index) has recently fallen more than 52% from its high and we are trading at about 6-year lows.

We believe that depending on your level of interest and role in the nanotech-investing world, the devastating economic, financial and investment environment that has surfaced over the last three to seven months will have dramatic affect; you need to drastically change what you’ve been doing.

Let’s examine the edits we would make today to Chapter 15 of Nanotech Fortunes.

If you are:


A Publicly Traded Advanced Technology Company

Scarce capital to grow or survive is about to become even more scarce. Count on this lasting (with possible short-lived windows) at least 2-4 more years.

If you do not have excellent, targeted IR and financial PR, you are not going to survive unless you dilute yourself incredibly (or have a full treasury to last 5 years already).

We have yet to see a single, publicly traded nanotech, “small tech” or advanced technology company with the proper understanding of the correct roles of IR or financial PR, much less doing what we consider to be even a “good job”.

Please call or email me to explore how we can be of assistance in any of the above. We serve customers; we tailor individual solutions; we believe every situation is unique and deserves individual attention.


A Private Advanced Technology Company

You’ve been having a hard time getting attention (much less capital) for more than a year. Sorry, but it is about to get much, much worse.

VCs and even Angels are looking for late stage, large dollar deals, and despite their continued failures to achieve positive investment outcomes they are likely to continue doing this.

The TSX Venture Exchange alternative that I’ve been speaking and writing about for years is even tightening up due to the recent natural resource debacle (not to mention the recession/depression in which we find ourselves).

In this atmosphere, only the most polished, most prepared, have a realistic chance of success. To put yourself in front of the best possible groups with the best possible presentation, you need maximum professional assistance.

We have a long history of working with micro- and small-cap public companies.

Please call or email me to explore how we can be of assistance in any of the above. We serve customers; we tailor individual solutions; we believe every situation is unique and deserves individual attention.



A VC or Private Equity Firm

Venture and other private equity firms still have not gotten a handle on how to make money in advanced technologies. The keys for the near future will be to focus only on companies: A. requiring very little capital to achieve an exceptional ROI in a very tight timeframe and B. that save industries capital, lower expenses or make existing processes more efficient.

Our firm has uncovered only five companies that fit this model today.

Please call or email me to explore how we can be of assistance in any of the above. We serve customers; we tailor individual solutions; we believe every situation is unique and deserves individual attention.


A Hedge Fund Manager

Except for a couple of atypical, VC-style private placements, hedge funds have done very little in the space. As their model suffers with the markets and economy through this most difficult period in their history, very little new is likely to be done.

This is an incredible opportunity for a forward thinker, not afraid to buck the pack. There will be no competition. A relatively small amount of capital, partnered with our firm’s merchant banking capabilities in “small” and advanced technology companies that save industries capital, lower expenses or make existing processes more efficient, would own the space for decades.

Please call or email me to explore how we can be of assistance in any of the above. We serve customers; we tailor individual solutions; we believe every situation is unique and deserves individual attention.


A Broker or Investment Bank

We have seen a number of investment banks and individual brokers fail in building the type of nanotech and advanced tech practice I first wrote about in 2004.

A few have financed deals that have just done horrendously.

Incorrect ways of looking at valuation and faulty research are usually at fault.

I have tried to get more than one well-capitalized group to turn this job over to our team. A more “merchant banking” style formula, proper research and a better valuation process would give this concept the success and the string of wins it needs to establish itself and the forward thinking broker or investment bank will reap substantial rewards.

Individual brokers could market and earn fees on separately managed accounts (SMAs) that trade fully-hedged long/short, options strategies or pairs trade strategies (the only strategies we believe can succeed in the flat or down markets we anticipate) run by professional managers or they could manage these types of trades for their clients by subscribing to a professional newsletter.

Prior to the collapse in oil prices, alternative energy, green tech, solar and cleantech, etc. seemed to many investment banks to offer the greatest potential for creating wealth from cutting edge technology companies, but that’s hit a fork in the road (or a brick wall) for the time being.

Please call or email me to explore how we can be of assistance in any of the above. We serve customers; we tailor individual solutions; we believe every situation is unique and deserves individual attention.

An Angel Investor

In 2004, the typical angel was an individual who invested $20K to $200K per deal and invested mostly on his own or with a small group. He or she saw himself or herself as pre-A round, seed investor willing to take serious risk to make a serious profit.

Since then things have changed a lot.

Angel investing is much more institutionalized, with large, geographically and interest-centered Angel groups making “group” decisions. These decisions, more and more look like venture capital firm decisions because the Angels no longer want to invest in anything in which a VC will not also invest.

This “group think” is destroying creativity and the institutionalization of the process appears to lower risk, but actually just ensures that small deals with high profit potential don’t get done: No one wants to do a deal that won’t be of interest to a large VC firm.

Some Angel groups would benefit from a higher-level scientific, technological and commercialization consulting than they can get within their group when looking at the cutting edge of technology.

Please call or email me to explore how we can be of assistance in any of the above. We serve customers; we tailor individual solutions; we believe every situation is unique and deserves individual attention.


A Very Affluent Investor or Family Office

Except for a couple of atypical, VC-style private placements, the truly wealthy and their Family Offices have done very little in the space. As their model suffers with the markets and economy through this most difficult period in their history, very little new is likely to be done.

This is an incredible opportunity for a forward thinker, not afraid to buck the pack. There will be no competition. A relatively small amount of capital, partnered with our firm’s merchant banking capabilities in “small” and advanced technology companies that save industries capital, lower expenses or make existing processes more efficient, would “own” the space for decades.

Also, while all investors should get a professional financial plan or current plan review, ASAP, those with net worth between $10M and $80M are at particular risk. These individuals usually have advisors who are unfamiliar with high inflation/deflation hedging and are too small to have developed, professional family offices.

Please call or email me to explore how we can be of assistance in any of the above. We serve customers; we tailor individual solutions; we believe every situation is unique and deserves individual attention.


An Advanced Technology Professional Services Provider

Up until the last 9 -18 months, this group was doing well.

Accountants, consultants and attorneys were about the only ones making money in the nano and micro space.

The world has changed, of course, and the universal tight capital is killing billings.

Marketing and reaching new clients is paramount at this time, and through our connection to Nanotechnology.com, we have access to the decision makers.

Please call or email me to explore how we can be of assistance in any of the above. We serve customers; we tailor individual solutions; we believe every situation is unique and deserves individual attention.


A Stock Investor

A major up-move (related to short-covering and the Obama honeymoon period) for short-term speculators has begun and will likely end between now and February 28, 2009 (we look for a high of between 92 and 101 basis the SPY. Traders should begin looking for places to reenter short positions between 93 and 97).

Other than that, we see little chance of a real market bottoming for long-term investors before the period between July 2009 and September 2011.

On cutting-edge technology companies: Affluent investors should begin long-term investments only in early-stage private companies that can save industries capital, lower expenses or make existing processes more efficient.

Others should avoid the public markets for these types of shares until a bottom is in place in the Nanotechnology.com Small Tech Index.

All investors (especially those with net worth above US $2.5 million) should get a professional financial plan or current plan review, ASAP, with that rare advisor who understands how to plan/hedge for both rampant inflation and deflationary scenarios.

Please call or email me to explore how we can be of assistance in any of the above. We serve customers; we tailor individual solutions; we believe every situation is unique and deserves individual attention.


Darrell Brookstein, Author of Nanotech Fortunes
Managing Director
The Nanotech Company, LLC
San Diego, CA
Phone: (in U.S.) - 858 794 0848
Email: darrell@Nanotechnology.com