Nanomix Stirs Up $9M in Series B

With a prototype of nanotube-based chemical sensors in hand, Emeryville, Calif.-based Nanomix has secured $9 million in a B round of venture financing that will finance the prototype’s transformation into a market-ready chip.

Al Schuele of Sevin Rosen Funds and Apax Partners’ Alex Wong led the round, while additional investors included EnerTech Capital Partners and Alta Partners, an investor in the company’s initial round of financing.

The company’s first round of venture financing closed in October 2001 with $4.5 million – enough capital for the company to set up its laboratory, hire scientists and engineers and design its first prototypes. Nanomix, spun out of the University of California at Berkeley’s physics department by two professors, Marvin Cohen and Alex Zettl, is combining semiconductor technology with nanotechnology to develop chemical sensors and hydrogen storage systems.

“The significant barriers have been to grow nanotubes on silicon, reproducibly and reliably and in a way that’s manufactureable. We’ve gotten over that,” says Nanomic chief executive Charles Janac. Janac, previously an entrepreneur-in-residence at early-stage venture firm Infinity Capital in Palo Alto, is also the founder of semiconductor robotics manufacturer Smart Machines in San Jose and the founding president and chief executive of Cadence Design Systems in San Jose, a design automation firm that went public in 1987.

This time around, the round of venture financing will be used to build the business side of Nanomix, adding to its sales and marketing group. About half of the company’s 24 employees are PhDs. The round is also expected to transform its technology from a prototype to a commercial product. The company plans to have its first chemical sensors ready to ship to customers by the end of 2003. Its fuel storage cells will be longer in development.

“The challenges are bigger than the usual ones of making a startup go – managing the people, building a company, building the technology, because in nanotech, you also have to get the science right,” Janac says. “Initially, the science risk lowers the company’s valuation, but ultimately it increases the valuation because of the number of patents and differentiation it generates.”

While Nanomix using nanotechnology to develop a number of nano-electronic applications and energy storage systems, its strategy is to bring products to market quickly without losing its focus on research on materials and design. It’s what Janac calls, “… a short-term strategy tailored to the strengths of what nanotechnology can do today.”

The company’s combined focus on nanotechnology research and product development is what gives Nanomix an edge, says Apax’ Wong.

The company is initially focused on the launch of 3mm X 5mm chip that will be used by industrial manufacturers for safety and control to detect gas leaks. The silicon chips use chemical detection layers that sit on top of carbon nanotubes to detect organic and inorganic materials inside a manufacturer’s instruments of production.

“Nanotubes make the world’s most sensitive transducers because they take advantage of quantum effects that larger scale technologies just don’t have. They have greater sensitivity, use less power and have a quicker response time,” Janac says

Next on the list of products is a high-density hydrogen storage system that can be used as fuel cells for portable electronics.

In the interim, however, the company is readying to ship its chemical sensors and is not likely to seek another round of venture financing until then.

Contact Carolina Braunschweig