A lot of the really exciting progress that we will see in the next few years will be happening at private startups that seek to emulate Zyvex's high-reaching goals. But with the venture capital funding climate slowing down, partially in response to public market receptivity, even Zyvex has wisely altered their strategy to integrate near-term revenue prospects. Others will have to follow suit or pray that they can be well funded enough to conduct successful research and get a deliverable product ready for sale.

Nano companies have to be sure to balance the blue-sky research with real demand. A lot of folks (and ultimately customers) understand the wide-reaching implications that nanotechnolgoy has, but I'm not sure they've considered making related purchasing decisions. Demand for nano-products (outside of instrumentation and research materials) hasn't been explosive yet. So, I think investors need to know they're going to be compensated for putting their money on the line, with something more than just a cool discovery resulting. Who are the customers?

Question 4: That explains my difficulties in classifying nanotech companies. Do you agree that the computer and medical industries will be the first to be impacted by nanotechnology? That was my reasoning behind buying into Nanogen, since they make products with real applications (gene chips), which combine microelectronics with biotechnology.

I think it's already happening...and I'd mention Affymetrix too. There is tremendous value in analyzing genetic information, which is very complex in and of itself, and then applying that information to diagnose or treat disease. These biotech companies are certainly poised for great growth, assuming they do what they claim they can do. The really salient point here is what they contribute to increasingly blurring the line between information technology (software), microelectronics, chemistry, biology and more specifically genetics. That's one of the wonderful things about the field of nanotechnology. In E.O. Wilson's words, its a "Consilience" of all these various fields. Applying the various knowledge bases into a tightly meshed lattice makes for a very powerful framework for new discovery...

Question 5: Indeed, mixing disciplines seems the way to go. However, it also seems that many companies that claim to be "nano" focus on just one market or one technique. For instance, Nanophase and the sunscreen or Zyvex with their MEMS. Is this due to the barriers of entry you described before? How can a small company mix disciplines and markets when there are so many well established companies specialized on one subject, protecting their rights with expensive lawyers?

Tune in next week for the answer from Josh Wolfe, Venture Capitalist.