A Nano "Think and Do" Tank
Assisting start-ups with government agencies, investors, corporations, universities and national
"Nanotechnology, US Manufacturing and Job Retention/Creation"
Follow up to the meeting in Washington, DC on April 1st, 2004
Based on testimony before the Committee and conversations with professionals in the field
(from small and large companies, venture capitalists, and universities and federal labs),
it is clear that there are obstacles to moving the results from basic R&D into the marketplace.
In particular, there is a lack of funding for middle-ground, pre-commercialization work because VCs feel
this is too risky for their investors and federal programs that support this kind of work have been branded
as "corporate welfare" and funding has been slashed by the Republicans.
By Eric Werwa, Aide to Congressman Mike Honda, D-CA
Rationale and Summary
To overcome these, we came up with the idea of a public-private partnership for investing in nanomanufacturing.
Private investors get greater return for the risk they take because the return on the taxpayer investment
is lower. The focus on manufacturing avoids the "corporate welfare" charge by investing in a national
capability rather than picking winners and losers.
The provisions in the current draft version can be summarized as follows:
* Creates a Nanomanufacturing Investment Corporation (NIC) within the Department of Commerce (needs a better title - I like Nanomanufacturing Investment Partnership, but that has an unfortunate acronym).
* Funded by a one-time appropriation of $750 million, which remains available until it is used, and a private sector contribution of at least $250 million. If $250 million is not raised from the private sector, the NIC is not formed.
* The bill explains the purpose of the NIC, described above.
* It establishes funding mechanisms through which investments can be made - direct investment in nanomanufacturing firms, contracts, loans or loan guarantees, unsecured subordinated debt, or any other mechanism designed to advance nanomanufacturing technologies.
* It sets guidelines on the return on investment, indicating that each transaction should provide for the return to NIC of fair and reasonable amounts resulting from the commercialization of technologies developed with the funding provided.
* It sets guidelines on how this return should be distributed - the return is evenly split among all investors including the federal government until the total federal investment in the project has been recovered, after which point the federal share is reduced to an as yet to be determined percent of the proportional distribution, with the remainder being distributed proportionally to all non-federal investors.
* It requires each applicant to the NIC to provide a portion of the cost of the project.
* It requires that each application for funding be peer reviewed.
* It charges the Secretary of Commerce with the responsibility to make awards of funding based on guidance from the Advisory Board and on the results of peer review.
* It requires the recipients of funding to make periodic project progress reports to the NIC.
* It establishes an Advisory Board to assist the Secretary of Commerce in carrying out the activities of the NIC. The Board will consist of representatives of each investor providing a certain amount as yet to be determined of funding to the NIC whose votes shall be distributed proportionally to the size of their investment and collectively amount to 40% of the votes on the advisory board and of independent experts on nanomanufacturing and finance appointed by the President from among representatives of government, industry, and academia whose votes shall collectively amount o 60% of the votes on the advisory board.