Q: How do I find out more about nanotechnology?

A: There are a number of good resources. A good overview can be read in a white paper called "Trends in Nanotechnology" at www.cmp-cientifica.com. The best quick overview with a business perspective can be found in numerous articles in Red Herring, Forbes, Fortune and other magazines. The September 1, 2001 issue of Red Herring is a useful publication. The September 1, 2001 issue of Scientific American is a very good overview that has a more scientific but understandable perspective. The March/April 2003 issue of Smalltimes magazine provides its evaluation of the nations top nanotechnology regions.

Scientific periodicals that have articles from time to time include Science, Chemical Engineering News, Nature and others. These are normally quite technical in content.

Organizations that have good background material available on their web sites include the Foresight Institute and the Institute of Nanotechnology (focused on Europe at The Institute of Nanotechnology UK) . Also check out NanoDot and Smalltimes for newsletters on nanotechnology.

There are a number of good books on nanotechnology for people who want in-depth understanding of nanotechnology. These include, Nanosystems: Molecular Machinery, Manufacturing, and Computation, by Eric Drexler. Another Drexler book, Unbounding the Future: The Nanotechnology Revolution, describes many potential applications for nanotechnology. Jack Uldrich has written a book, "The Next Big Thing Is Really Small," that is designed for lay people who want to understand how nanotechnology may impact their business.  Other books can be found on amazon.com.

Several university web sites have good nanotechnology information. These include UCLA, Rice, Cornell, Northwestern and many others. On the Rice web site, Richard Smalley's speeches to various organizations are very educational.

Finally, NFT has a backup book that contains these and other articles and studies on nanotechnology, its future importance and the importance of technology in driving our economy.

Q: Where can I get more information on industry clusters?

A: Michael Porter of Harvard University has published extensively on this topic. Information on his books and other material can be found on his web site. Also found on his web site are summaries of his cluster research for each state that he presented to the National Governors' Association meeting in February 2002. The Council on Competitiveness has published a study called, "Clusters of Innovation: Regional Foundations of U.S. Competitiveness." It can be obtained from their web site. RAND has published a study called, "The Global Technology Revolution" which can be found on their web site. The Milken Institute also has published data on technology cities called, "Knowledge-Value Cities in the Digital Age." Their web site can be found here. W. Arthur "Skip Porter has written a book called, "The Knowledge Seekers," on the importance of community-based talent from regional universities, industries and government agencies and how this contributes to wealth. Finally, the IC2 Institute of The University of Texas at Austin has studied the impact of technology on economic development.

Q: What is the legal organization of NFT? Is it a foundation? Is it a 501c(3)?

A: NFT is organized as a nonprofit, public charity foundation with a board of directors and operating staff. The Internal Revenue Service issued its determination letter granting NFT its 501c(3) status in August 2002. The Commercialization Advisory Board, which will advise the board and staff on issues involving the scientific merit, commercialization potential and industry priorities, is in the process of being organized.

Q: Shouldn't we expect the Texas legislature to do this?

A: Yes we should, but in order to gain momentum, we need NFT and other organizations to educate state leaders about the importance of nanotechnology.

If you believe that nanotechnology is an important, foundation science, you will agree that more research dollars are needed than the state will provide. Remember, California and New York are investing $100 million and $50 million dollars respectively in nanotechnology. Florida and Ohio have discussed similarly sized nanotechnology initiatives.

Texas has a very attractive environment for people to live and work. Part of this attractiveness is a lack of income tax. As a result, our state government has fewer dollars to apply to these opportunities compared to other states. However, the state is providing some support in a number of research programs. However, these are not focused on nanotechnology.

Q: If this is for research, how do I know the money will go to develop something beneficial?

A: It is true that some research will not result in quantifiable contributions to society. However, by contributing to NFT, you will be able to invest in a broad range of science. Just like an investment portfolio, you will spread your risk. Some research will result in dramatic improvements for society, significantly out-weighing those that do not.

Q: I have heard that nanotechnology is being hyped as the next big thing. That sounds like the dot com era. Is this another investment fad?

A: Nanotechnology is receiving some excessive hype in the investment press and from promoters of industry conferences. People are making excessive claims about how soon and how much venture capitalists are going to invest.

NFT is an investment in research, where the money is needed today.

But let's compare nanotechnology to the dot com era. To start, dot com companies required little, if any, intellectual capital with no plant facility and few real assets. A nanotechnology company requires substantial intellectual capital evidenced by its patent portfolio that is built by people who have advanced scientific degrees. Getting these products into production will also require cash for facilities. There are substantial barriers to entry in nanotechnology compared to virtually none in the dot com era.

Q: What is the point of having a foundation with such a narrow focus?

A: Because nanotechnology has such a broad application, this is actually not as narrow as it might appear. Applications of nanotechnology will be found in areas ranging from space travel and defense to consumer electronics and clothing. Further, Texas has a lead in this important new field of investigation. If we invest in this basic field of research, we will be investing in our future economy. The new products and industries that come from this research will provide a base for an economy 10, 20, 30 or more years in the future. According to the National Nanotechnology Initiative, "The emerging fields of nanoscience and nanoengineering are leading to unprecedented understanding and control of the fundamental building blocks of all physical things. These development are likely to change the way almost everything -- from vaccines to computers to automobile tires to things not yet imagined -- is designed and made."

Like the explosion of new industries that microelectronics produced in Silicon Valley, nanotechnology is going to pave the way for entirely new industries to emerge. Texas has an opportunity to play a leading role, but only if we continue to invest.

Q: What do you mean, "continue to invest?" Who has invested to date?

A: Most of the investment has come from the federal government to date and from some monies of the universities themselves. The following table shows a summary of Federal funding for fiscal years 2000 through 2003:

Other U.S. regions have recognized the opportunity that nanotechnology provides. California is building a $350 million research institute ($110 million from the federal government, $100 million from the state, $90 million from private foundations, and $50 million from industry) at UCLA and UC Santa Barbara. New York is spending $50 million for use in nanotechnology research in conjunction with IBM and the State University of New York in Albany.

Q: Won't this fund compete with the universities themselves?

A: Actually, no. Universities are raising money for general educational programs and endowed professorships in every field of education and buildings for both general and specific purposes. This fund will focus on nanotechnology research, not general programs and buildings. Further, we anticipate that in many cases the universities will provide some matching funds, either from their own endowment or from government research grants. All of this money will go to research in nanotechnology.

Q: Why shouldn't I give my money to a specific college if I want to support nanotechnology?

A: Investing in nanotechnology requires investing in many scientific disciplines -- chemistry, physics, biology, engineering and many others. By investing in NFT you are assured that money is being invested in the right disciplines through a coordinated effort. Further, investing in nanotechnology is similar to investing in startup companies. You need to invest in a portfolio of companies (scientific disciplines) because no one can predict where the breakthroughs will occur. Investing in NFT allows you to make that portfolio investment.

NFT will have a Scientific Advisory Board made up of researchers from leading Universities and a Commercialization Advisory board made up of leading researchers from technology-focused corporations like IBM, Intel, Dupont, GlaxoSmithKline and others to help select proposals on the merits of the science, the potential for commercialization and the potential to collaborate with other Texas universities to gain the greatest leverage from your donation.

Q: Why shouldn't I give my money to the Brown Foundation or someone like that?

A: NFT is a foundation that focuses on nanotechnology. Many foundations fund education; however, they often do not fund scientific research. NFT will invest in scientific research. We will also work with these other foundations to bring to their attention segments of funding that fit their criteria. This will bring more funding to the nanotechnology opportunity.

Q: Aren't there other foundations that do invest in research?

A: Yes there are. Right here in Texas we have the Welch Foundation, the Clayton Foundation for Research and other entities that invest in research. In San Antonio there is also a contract research organization called Southwest Research Labs, but most of its research belongs to the sponsoring corporations. The W. M. Keck Foundation also supports scientific research on a national basis. None of these research organizations is exclusively devoted to this important field of research. NFT expects that it will work with these other organizations to coordinate its grants and maximize the value of our joint investment.

Q: If these new industries will be 10 or 20 or more years down the road, why invest in nanotechnology at all? Aren't the payoffs too uncertain?

A: Yes, the payoffs are uncertain, but not because of the time horizon. They are uncertain because we are doing basic research and the results and their subsequent applications cannot be predicted. That is the reason investments need to be made in a portfolio of research opportunities: to spread the risk and to cast a wide net.

More importantly, the growth of new industry clusters has already started. These clusters may not begin their rapid acceleration for a decade or more, but they have started. If they are gong to be located in Texas, we must develop much of the research that creates these industries. Otherwise, the industries will be located in other states and countries that do support research. We must recognize that we are investing in our future. Our opportunity is to create the Silicon Valley of the 21st century.

Q: Well, if this is so risky why should I invest in research at all? Maybe I should just wait and invest in a company.

A: Wait a minute! You seem to be thinking about an investment in securities when you ask about risk. We are talking about two different kinds of investments here. Investing in research is an investment in the future of society as a whole. Sure, investment in scientific research has risks, but it will pay off for society as a whole and for the Texas economy.

Investment in a company raises the difficult question of, "Which company will be successful?" If you want to invest for a cash return to you personally, invest in one of the fine venture capital funds. Nanotechnology is too early-stage in its development for most investors to invest in on a company-by-company basis.

Q: Will people actually write a check for nanotechnology research?

A: We believe that individuals and family foundations that are interested in investing in the future of Texas will. These individuals that do invest will recognize that they are investing in the future. They are investing in technology that will create new companies -- even new industries. They will be investing in a future that leverages the best of Texas: our oil & gas and chemical infrastructure; our NASA and life science research in Dallas, Houston and San Antonio; and our computer, telecommunications and semiconductor technologies throughout the state. Further, these new industries will create high paying jobs in clean industries.

Q: Why are the funds not going into an endowment and why are they being spent in a short period of time?

A: Money that goes into an endowment contributes only fractionally to the benefit of society. Only the earnings go toward this goal, although they do provide benefits in perpetuity. At a 5% earnings rate, it would take about $100 million in an endowment to provide a $5 million benefit over three years. Also, the purpose of NFT is to further accelerate our lead. This should only be needed for a short period.

Q: Who is going to make this kind of investment?

A: We have developed a four-page list of people who have demonstrated that they will invest in research and education. Probably only a hand full of these have invested in nanotechnology because it is a young field of study, but many of them have invested in science and biotechnology. One page of the four is people who would Champion this cause and form a base of individuals who themselves would be capable of providing more than half the fund. The other half will come from foundations and corporations around the world like IBM, Motorola, Intel, Dupont, Dow, Shell, BP, Chevron-Texaco, Pfizer, Merck, Bayer, and others whose future products will come from the nanotechnology research that will be done in Texas.

Q: Where else is nanotechnology being researched?

A: Actually all over the world, and especially in Europe, China, and Japan. In the United States the centers of concentration are California, New York, Texas, and the upper Midwest (Illinois, Michigan, Ohio, Pennsylvania). Worldwide research spending is shown in the following table:

Worldwide Nanotechnology Spending (Millions of US Dollars)
*Source: National Science Foundation

Q: Is there any similar program you can point to as a model?

A: One good example is the MIT Media Lab. Much of the Media Lab's work is organized into five consortia, which are funded primarily by corporate sponsors. Many of the technologies and applications conceived within the consortium structure are tested and refined through experiments at MIT and in the field, in cooperation with individual member companies. In 2000-01, the Media Lab received more than $36 million from sponsors, an increase of 18 percent over the previous year. Corporations provided more than 95 percent of that amount, with the remainder coming from government funding, non-profit organizations, and subcontracts with other universities. The focus on corporate support reflects the Lab's commitment to collaborative research that has possibilities for a wide range of applications, and technology transfer that moves research results out of the Laboratory and into worldwide use. Fifty percent of the Laboratory's 150 sponsors have their headquarters in the Americas; 25 percent in Europe; and 25 percent in Asia. Businesses represented range from electronics to entertainment, furniture to finance, and toys to telecommunications.

Another example is MCC. This 18-year-old institution was formed to leverage the research interests in early-stage discovery related to semiconductors and electrical packaging. Ten member companies paid $275,000 per year to belong. MCC is winding down, but it owns shares in 10 small spin-off companies. More importantly, MCC is often recognized as the key action that resulted in the Austin technology explosion.

These are good models for NFT to evaluate. However, they must be modified to reflect that our focus is not on a physical facility at one institution or location. They do, however, demonstrate two successful ways of bringing more research funding to Texas. Therefore, we will start with an emphasis on individual donors, but expand our reach to major corporations worldwide. This corporate sponsorship may grow to become the most significant as the program matures.

Q: What is the difference between NFT and Texas Nanotechnology Initiative (TNI)?

A: NFT is a nonprofit, 501c(3) foundation. NFT's purpose is to raise money to fund university-based research. The Texas Nanotechnology Initiative (TNI) is a member organization of institutions, companies and individuals involved in nanotechnology; TNI is a 501c(6). TNI will work with the legislature to pass laws benefiting the industry, hold an annual venture conference, and provide other industry support functions. Both organizations support nanotechnology -- NFT as a research funding source; TNI as a trade association.

A: We anticipate that we will continue to raise funding from corporations and foundations. If our support from corporations grows, funding may become a subscription model similar to the MIT Media Labs. This could provide $10 to $20 million a year in funding that would be shared among many universities doing research on a collaborative basis. If additional funding is not available at some future date, the foundation will turn its operations over to either an existing entity or other foundation and close its doors.

A: Nanotechnology is a multi-disciplined science that is making possible the discovery of new materials and properties of materials that will form the foundation of new industries. We will see the emergence of substances like smart materials that can react to their environments; super conducting materials that work at normal temperatures; lighter, stronger materials than we have ever known; and even smart pharmaceuticals that target cancer cells. Developing these new innovative materials requires new research.

The 2001 Rand study for the National Intelligence Council indicated that "progress in nanotechnology will heavily depend on R&D investments; countries that continue to invest in nanotechnology today may lead the field in 2015." The same can be said for Texas. In fact, during a September conference call for securities analysts led by Merrill Lunch's Technology Strategist, Steven Milunivich, the question was asked, "Where is the center of nanotechnology in the U.S.?" The answer was, "There may not be a center, but if there is, it is Houston, Texas." In 2015, we want that answer to be, "The center of nanotechnology worldwide is Texas."

Q: I have heard that nanotechnology may require 2 million trained people. Where are these people going to come from?

A: That is a great question. This is going to put a great strain on our K-12, junior college and college programs. We have to graduate more science literate people for jobs of all kinds, not just nanotechnology.

Q: Well, why doesn't NFT do something about that shortage?

A: Education is a passion of several leaders and foundations in Texas. Masterson believes that they can address this issue better than he can. No one, however, is focused on nanotechnology research that will create the companies that generate the jobs to cause this workforce demand.

Q: Why is Conrad Masterson involved in this?

A: First and foremost, Conrad believes that nanotechnology, although long-term in its development, is a once in a lifetime opportunity for Texas to create a sustainable lead in a major industry (like the discovery of Spindletop and other oil discoveries were in 1901). Second, he sees very little being done to leverage the lead that the state has achieved. He wants to try to make this opportunity come to fruition. Third, he believes it can be a natural complement to the state's existing industry clusters of telecommunications, semiconductors, energy, oil & gas, and chemicals, and to create entirely new companies. Further, this is an area that can leverage the massive life science and Johnson Space Center research that today is not being commercialized to the fullest extent possible. Finally, he is in a position to be able to devote a significant amount of time to capitalize on this opportunity.

You might also ask, "Why not start a venture capital fund?" This technology is misnamed. It should be called nanoscience; it is still very much involved with scientific discovery. Now is the time to invest in research. There will be a time for venture capital later.

His interest is not research for research's sake. He is interested in creating companies with jobs that are well paying, challenging and environmentally sound. Nanotechnology offers an opportunity to create the Silicon Valley of the 21st century. He wants to help make Texas a better place for his grandchildren to live and work.

Q: What are Conrad's credentials for establishing this initiative?

A: Masterson has been involved in nanotechnology since the summer of 2000 and has in-depth experience starting organizations. Although his undergraduate degree was in mathematics with a minor in physics, Masterson is not a scientist. His business interests are in commercialization, and he has been an executive in six early-stage technology companies. He also has an interest in the community. Masterson helped start the Houston Technology Center; he developed the plan for the Fort Worth technology incubator; and he has launched a number of very successful ventures both in the commercial and nonprofit communities. Masterson is a Senior Associate of the Foresight Institute. He is active in the leadership of his church.

Feel free to contact us with any additional questions.