The Speculist

A quibble:

The good news is that IPOs like this one, and the ones to follow, will focus more attention on the industry, and probably serve to open up what has been, up to now, a rather clubby and inbred environment to more sophisticated players and attitudes. That's likely to encourage a more mature approach over the long term. Let's hope so -- not just for the future of the industry, but for the sake of all of us.

The more sophisticated, mature players are already in the industry. They're the competent venture capitalists. IPO's will permit mutual/pension funds, individual investors, etc to purchase a piece. They bring a degree of sensibility that may not currently be present, but I think Reynolds exaggerates their contribution.

In addition, I think nanotech is getting set up for a bubble market. If they can get the IPO gravy train working, then it'll be 1999 all over again. The key here is whether the VC have an available exit strategy. Currently, that means either you can IPO and sell to the public markets or get the company bought out by another company.

I think I've been predicting this for the last couple of years for the five to ten year time frame. So I predict a bubble in nanotech in the 2006-2011 timeframe. Crudely, a good symptom will be a sudden decline (the "popping of the bubble") of at least 50% value in companies that focus on nanotech-related technologies.

Studying the recently announced Google IPO, I think it has the possibility of heating up the IPO market significantly. Nanotech-related firms would benefit from renewed attention.

Further, Google plans a sort of Dutch auction (I haven't read the details directly). That's a vast improvement over the rigged IPOs of the dot com bubble. If this form of auction IPO becomes commonplace (and I see no reason other than the resistance of traditional IPO brokers), then that would improve my outlook on the nanotech market. I'd still expect a bubble market, but on the other hand, more money will stay with the most productive members of society rather than the con artists.

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