Bruce Stewart doesn't look like a nanotechnology magnate. At 69, he's old enough to dodder. He doesn't always finish his sentences. He doesn't have a PhD, and his background is in investing, not science. His business strategy? Be nice.
"My dad told me, 'Always have a smile and be friendly, and it'll pay back tenfold,'" Stewart says. He plans to make money with a daring approach to funding technology: He's trying to corner key nanotechnology research, then develop it commercially. His company, Arrowhead Research Corp., has assembled more than 160 key patents in nanotech. It has started four promising companies, and it's sponsoring research at Duke, Stanford, and the California Institute of Technology.
Arrowhead is far enough along, in fact, that two of its shareholders upped their stakes by almost $20 million in January, although the company likely won't deliver significant revenues for at least two more years. "If nanotech is going to be a big business, Stewart will have built the model," predicts Doug Thomas, president of JET Investment Research in Lancaster, Pennsylvania.
Arrowhead seeks out research that's patented, or could be, in significant areas. For instance, nanotech could yield highly bendable consumer-electronics devices someday. A likely research path involves carbon nanotubes—so Arrowhead holds rights to nanotube patents from eight universities. It used those to start NanoPolaris, which is developing materials for flat-panel displays, light-emitting diodes, and solar cells (no bendable stuff for now). Arrowhead also started Insert Therapeutics, which in June began enrolling patients for clinical trials of a promising cancer fighter based on nanobiotechnology.
Unlike other VCs, Stewart maintains a controlling interest in any company Arrowhead starts. And he goes after research before it's ready to come out of the lab, considerably earlier than the typical VC, says Fred Farina, assistant vice president of technology transfer at Caltech, which has licensed intellectual property used in most of Stewart's startups. Farina thinks Stewart's approach addresses a vexing problem with technology transfer: getting late-stage research from the lab to the market.
Arrowhead still has to get products to market. But it has met its milestones so far and has more than $30 million in cash. If his investments pan out, Stewart may be in the driver's seat of big swaths of nanotechnology. Which would be very nice indeed.