Area Development
The Golden State continues to expand upon its longstanding reputation for innovation. This year, the spotlight shines on nanotechnology, biotechnology, and "clean" technology - the three sectors singled out by California Governor Arnold Schwarzenegger's Strategic Research and Innovation Initiative, which allocates funds to several major projects in these rapidly evolving technology fields.

Anticipation of this special state funding was a key factor in British Petroleum's (BP) selection of the University of California's Lawrence Berkeley National Laboratory (LBNL) as the location for the Energy Biosciences Institute, a long-term research project to develop alternative fuels. The governor's initiative budgeted $40 million in lease revenue bonds, and BP in turn awarded a $500 million grant for the project. Also at LBNL is the Helios Project, focusing primarily on solar energy, for which the governor allocated $30 million in lease revenue bonds to go toward construction of a new energy/nanotechnology research building.

The Helios Project and the Energy Biosciences Institute are both good examples of California's commitment to technology industries, but they represent only the tip of the iceberg. The state's proposed 2007-08 budget also includes more than $250 million to support research throughout the University of California system, plus about $20 million toward operating costs of the four California Institutes for Science and Innovation.

These institutes, which conduct primary research in information technology, biomedical research, and nanotechnology, have generated more than $1 billion in projects from private and federal sources since their inception in 2000 (after an initial state investment of $400 million). The California Nanosystems Institute, for example, with its lead campus at UCLA and also facilities at UCSB (Santa Barbara), has attracted investments from a very wide range of industries, working on projects as diverse as nanomaterials for manufacturing or energy production, nanoscale medical diagnostic and delivery systems, and computer memory devices built out of interlocking molecules.

Meanwhile, California Institute of Technology (Caltech) in Pasadena and Stanford University in the Bay Area are considered among the top nanotechnology research institutions in the country, and intense nanotechnology research is also taking place at the national laboratories in the state. LBNL is home to the Molecular Foundry, one of five Nanoscale Research Centers overseen by the U.S. Department of Energy; Lawrence Livermore National Laboratory and the Livermore campus of Sandia National Laboratory each have several specialized nano labs; and the NASA Ames Research Center in Silicon Valley has a large nanotechnology program, frequently working in cooperation with universities and industries.

Nanotechnology in particular is considered a "disruptive" technology - expected to have an increasingly large impact on every major industry worldwide in the years to come. Because it overlaps industries, nanotech is not so much an industry in itself as it is a technical specialization. Nanotech 2007, the 10th annual conference of the Nano Science & Technology Institute, is expected to draw more than 4,000 attendees in late May to Santa Clara in Silicon Valley, with scheduled industry presentations to include sessions on such industries as semiconductors, telecommunications, health sciences, polymers, transportation, energy, and food.

"Everybody sees that nanotechnology is the wave of the future," says Dina Lozofsky, director of technology commercialization at the California Nanosystems Institute. "It's something that will impact industries across the board - healthcare, energy, environment. It crosses lines, bringing together experts from all fields." She cites two good examples of how a technology can move from the lab to the market: Santa Monica-based NanoH2O LLC, which is set to begin field tests soon on water filtration membranes containing nanoparticles; and Los Angeles-based Unidym, which is marketing carbon nanotube technology for use in a range of electronic applications including solar cells, touch screens, and "smart" windows. Both of these recent startups came about as a result of research at UCLA.

Nano-related patents continue to multiply, already playing a crucial role in advances in biotechnology and "clean" technology, the other two sectors boosted by Governor Schwarzenegger's initiative. Nanotubes, nanospheres, nanowires, and many other kinds of nanodevices and nanomaterials are making the transition from research and development to commercialization in both biotech- and cleantech-related industries.

As is the case with any high-tech venture, all of these specializations are extremely complex and require high levels of engineering expertise as well as knowledgeable investors. Fortunately, California offers both in ample supply. According to the 2007 State New Economy Index published by the Information Technology and Innovation Foundation, California is the top state for the number of inventor patents issued per capita. It also ranks among the leading states for percentage of jobs in high-tech industries, scientists and engineers in the work force, entrepreneurs starting new businesses, industry research and development, venture capital investments, and initial public stock offerings.

Geographically, high-tech clusters in California are concentrated primarily around the Bay Area (including Silicon Valley) and along the southern coast (Los Angeles and San Diego), linked closely with the state's evolving information technology sector.

Cleantech On the Rise
Like nanotech, cleantech encompasses many industries - including any technology (especially high-tech) that addresses environmental issues, from pollution control to energy efficiency. Now that global warming and other "green" concerns have moved out of the fringes and into the mainstream of public opinion and policy, California is leading the way in cleantech development.

Governor Schwarzenegger has been particularly active in promoting this technology sector. In addition to including cleantech in his Strategic Research and Innovation Initiative, the governor's pioneering efforts to reduce California's greenhouse gas emissions and reliance on foreign oil have also included the Hydrogen Highway, which is a network of hydrogen fueling stations intended to help speed development of - and public interest in - alternative-fuel vehicles. Other projects include the Million Solar Roofs Initiative, one of several incentive programs to encourage widespread deployment of solar power, and the Low Carbon Fuel Standard (LCFS), which mandates lower emissions for passenger vehicle fuels. Shortly after he established this new standard, the European Union announced a pollution standard for motor fuels almost identical to California's. The governor is also at the forefront of the push to create a national LCFS in the United States as a whole.

According to Schwarzenegger, "California's economy stands to greatly benefit from the wave of new businesses and jobs created by the emerging technologies and different approaches to fighting climate change." The state's emphasis on promoting cleantech has opened a wide array of opportunities for companies with the technical expertise to tackle the challenges of "going green," and interest in cleantech by venture capitalists continues to grow as a result. In February, a cleantech forum in San Francisco sponsored by New York-based investment firm Jefferies & Co. attracted about 1,000 attendees - double the attendance of the same event a year earlier. Entrepreneurs seeking capital funding presented a wide range of technologies to potential investors, including nanotech membranes for use in water desalination plants, bio-engineered crops for ethanol production, biodegradable plastics, energy-efficient lighting, and environment-friendly production of building materials. Venture capital firms are now including cleantech strategies in their business plans, and some are specializing in this sector, just as some are now specializing in nanotech and biotech.

Nanotech and biotech will play an increasingly larger role in cleantech developments. The Nanotech 2007 conference includes a subconference, Cleantech 2007, with a long list of topics and application areas in which nano, bio, and cleantech overlap. Creation of biofuels, "smart" fertilizers, or bioremediation devices, for example, will involve all three sectors. The Energy Biosciences Institute, clearly a biotech/cleantech operation, will also incorporate nanotech into its research, with easy access to LBNL's Molecular Foundry as well as the new energy/nanotechnology facility in the works for the Helios Project.

Bio/Nano/Info Synergies

The governor's Strategic Research and Innovation Initiative also includes state matching funds to enhance California's bid for the ultra-fast Petascale computer, a National Science Foundation grant for which the University of California system is one of four finalists nationwide. If California is selected for the project, it will further enhance the state's already strong global leadership in the information technology sector.

Information technology in California is strongly linked to nano, bio, and cleantech. Many owners, managers, and engineering staff of technology startup companies have computer-industry backgrounds, and many IT-related companies are investing heavily in these emerging technologies, especially nanotech, which promises the ultimate in miniaturization.

In Silicon Valley, nano research has continued to progress at Hewlett-Packard, IBM, Intel, and other computer industry giants, in some cases spawning new companies. Santa Clara-based Agilent Technologies, an HP spinoff that went public in 1999 and is probably most famous for its optical mouse sensor, is now a world leader in nanotech instruments for measurement, imaging, and manipulation of nanomaterials and nanodevices. These types of devices are increasingly being used across a broad spectrum of industrial and medical applications. Software developers are also specializing. Atomistix A/S, based in Copenhagen with U.S. headquarters in Palo Alto, has commercialized software for the study of nanoscale systems and devices.

The synergy in California among technology industries, academic research institutions, and government is another strategic advantage for technology companies locating in the state. Bio, nano, and cleantech startups have arisen from university research programs as well as from work at the national laboratories, and technology companies, in return, provide strong financial support to California's academic institutions through grants and contracts. Federal government research grants and contracts, meanwhile, flow to both academia and industry. Emeryville-based Nanomix Inc., which produces ultra-sensitive carbon nanotube chemical detection devices, has received more than $1 million in National Science Foundation grants to continue development and commercialization of its proprietary technology, and earlier this year was awarded a $1 million grant from the Department of Homeland Security to work on a special project in cooperation with the Naval Research Laboratories.

Public-private partnerships and interdisciplinary collaboration accelerate a technology's transition from pure research to practical use or commercialization. At Caltech (also home to NASA's Jet Propulsion Laboratory) is the Institute for Collaborative Biotechnologies (ICB), formed four years ago through a unique alliance of industry, academia, and the U.S. Army. Interdisciplinary teams of molecular biologists, chemists, physicists, and engineers from Caltech, UCSB, and the Massachusetts Institute of Technology are developing biomolecular sensors, photovoltaic nanoparticles, bacteriophages - which automatically assemble semiconductor nanocrystals that can be spun into fibers and woven into fabrics - and many other futuristic technologies for applications limited only by the imagination. Although the work is meant to advance the Army's capabilities, the research is unclassified and ICB encourages industry involvement. Palo Alto-based biotech firm Genencor International and more than a dozen other companies specializing in nano or biotech are listed as ICB industrial partners.

The University of California at Berkeley houses the National Science Foundation's Center of Integrated Nanomechanical Systems, where multidisciplinary teams are focusing on development of nanotechnology-based detection systems that combine nanoscale sensing, power, electronics, wireless communication, and mobility into a single platform. Industrial partners include IBM, HP, Intel, Honeywell, ChevronTexaco, General Electric, and Nanomix.

NanoBioNexus, a nonprofit organization founded two years ago in San Diego to promote nanotech and biotech research and commercialization, is building a worldwide network of experts in these fields from both industry and academia, working to connect them with actual projects. Already, the group has seen success, getting a molecular diagnostics project going at Oxford Nanolabs in England and leading the team that last year won a five-year National Cancer Institute grant to establish the NanoTumor Center at University of California San Diego, which is now researching development and commercialization of nanotechnology to diagnose, treat, and monitor cancer.

"In nanotechnology, there is an incredible amount of research going on in laboratories, but commercialization is a long-term, arduous process," says NanoBioNexus member and spokesperson Sandra Kay Helsel, Ph.D., who notes that it can take years for a startup nanotech company to establish itself in the marketplace. Networking on an international scale is a key part of the process, she emphasizes - in contrast to the early days of computer technology developments, nanotech, she says, "can't be built in someone's garage." One trend that Helsel has observed is that many entrepreneurs and researchers involved in nanotech are shifting their efforts more toward cleantech developments. "Nanotech is so long-term, and cleantech funding is easier to come by right now,"

According to a report published last September by the Milken Institute analyzing the commercialization of university-based biotech research, California leads the nation in venture capital funding for biotech. Continued state investment virtually assures that it will keep that lead. California's tradition of innovation, its world-class universities and national laboratories, its ever-evolving and expanding network of high-tech industry clusters, and its technology-friendly government policies combine to offer a clear strategic advantage to technology companies of all types and sizes.