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Something Ventured: April 27th

Insight For BC Technology Entrepreneurs

By Brent Holliday

Hot Technologies of the 21st Century

"...with illusions of someday casting a golden light... You are ahead by a century" - The Tragically Hip, Ahead By A Century

In venture capital, we're constantly looking for ideas on the cutting edge of the technology curve. We want to invest in companies that will create the market opportunities of tomorrow. Because we are immersed in evaluating many technologies, we tend to fancy ourselves as predictors of the future. So in that vein, I'd like to present a list of the technologies that the billion dollar companies of the future will commercialize.

This list is a modified version of the one that Dr. Arthur Carty, President of the National Research Council, presented at a speech in July of last year (He in turn modified his list from a list done by Stephen Millet). I'm going to add my two cents, of course, by adding the names of BC companies that are positioned to take advantage of these technology trends. I anticipate that I will not complete the list and I'm looking forward to your input and discussion points.

Before I get to the actual list, I would like to anticipate my potential inaccuracy, by quoting some of my favourite inaccuracies of the past:

Charles Dole, Commissioner, U.S. Office of Patents, 1899: "Everything that can be invented has been invented."

Lord Kelvin: "Heavier than air flying machines are impossible."

Thomas Watson, Chairman of IBM, 1943: "I think there is a world market for maybe five computers."

Ken Olsen, chairman DEC, 1977: "There is no reason anyone would want a computer in their home."

Bill Gates, chairman Microsoft, 1981: "640K ought to be enough for anybody."

In no particular order:

1) Human genetic mapping and engineering leading to gene therapy

The human genome project is well underway and some promising discoveries have been made so far, but commercial successes are still a ways off. All of the major pharmaceutical companies are already placing bets in early research. BC Companies: StressGen, Kinetek, Micrologix, Neurovir

2) Innovative agriculture and plant biotechnology

While you might think of Saskatchewan as the place to be for this technology, BC has some interesting stuff going on in forestry. Among the companies looking to invest in this area is Monsanto. BC Companies: Silvagen

3) Simple intelligent human machine interfaces

Oh, this one is just loaded with Microsoft jokes... but they are actually quite serious about achieving this. As far as the interface being a monitor, look for 3D interfaces as soon as Windows 01. But, there is the Negroponte view of the world: flexible LCD panels that act as electronic books or newspapers. Also, a company in the US, called Opcom, has come up with a two way screen. It looks at you, too. BC Companies: Dynapro, Kinetic Effects

4) Innovative materials

This is a rather general view of the fact that nylon and plastic came out of nowhere to be large commercial successes. We are hearing about ceramics, lubricants and polymers of all types. The commercial implications are wide open for any new material. Take silicon, for example. It can make chips and breasts. BC Companies: Northwest Mettech

5) High-density and mobile energy storage

Think batteries. Think of #8 below. There should be a quantum leap in energy storage technology coming soon. There is immense commercial pressure to miniaturize and to not be plugged in. BC Companies: Statpower, Bluestar Battery, Xantrex

6) Digital imaging and high-definition TV

This is not so far out in the future as some in this list. After all, the HDTV standard is finally being applied to commercial roll-out this year. But the advances in digital video will be profound over the next ten years. Its commercial impact is not in doubt when you consider the reach of television. Also, the digital still photography market (cameras) is growing and should start eating traditional film the way CD audio ate vinyl. And then there is satellite imaging.

A VERY smart guy, Mark Anderson from down in Washington state, has a vision for a complete, highly accurate map of the earth, called Earth II, that resides on the Net. Using satellite imaging and correlated databases, anyone could ìdrill downî to a location on the planet, see what it really looks like and have access to data, such as, the local weather today, the crime rate, the available real estate and prices, etc. It's a great application of digital imaging and you can read more at
http://www.earth.to/what/what.htm. BC Companies: MacDonald Dettwiler, Ward Labs, Cinax Designs, Inmedia Presentations

7) Educational and entertainment content

If the 90's were the decade of the Internet and bandwidth expectation, the next decade should offer some broadband reality. And to fill the new pipes and the cheap PCs or Web TVs, we need stuff to entertain or educate us. Finally, the ìmultimediaî industry will take off. Consumer demand will create viable business models. There are multi-billion dollar media companies looking to control this market with names like Disney and Time-Warner. BC Companies: Electronic Arts, Radical, DNA, Mediaseek, Multiactive Education

8) Miniaturized, highly personal electronic products

Not Tamogotchi, OK? This prediction refers to the wireless communicators and electronic productivity or entertainment devices. The Dick Tracy watch is still out there. I think smart card technology fits here. The future database of your medical history and financial records will be on one card. BC Companies: Spectrum Signal Processing

9) Cost-effective systems integration of sensors, controls and power

This will have impact on manufacturing, transportation and in your own home. The integration of these systems will bring about the automated home and the commuter cars that travel 100 km/h, while only five feet apart. It is an exciting area of applied research today and ties in with #13. BC Companies: Circon, Tantus Electronics, Arbutus Cove Systems, Unitec

10) Highly accurate and targeted medical treatments and drug delivery systems

I think of those videos from the Persian Gulf war. You know, the ones where the highly accurate missile hits the target bunker through the front door. The future of drug therapy will be that precise. The upside is a drastic reduction in side effects. In BC, there seems to be a prevalence of companies in this space. BC Companies: AnorMed, Inex, Angiotech, QLT Phototherapeutics, Synapse, Inflazyme, CTF Systems

11) "Green" processes and manufacturing technologies

Everyone wants a cleaner planet. By reducing emissions and other pollutants, we increase the quality of life for all. Regulatory changes have kick started some market opportunities, but consumer demand will drive the market next century. BC Companies: UV Systems, Ballard Power

12) Hybrid fuel systems for transportation

Fuel cells rule! 'Nuff said.
BC Companies: Ballard Power Systems

13) Micro-machines and molecular computers

There is considerable research into the miniaturization of mechanical and electrical components. With smaller parts come smaller costs and other efficiencies. Molecular computers may help keep Moore's Law accurate. Todayís semiconductor components are running into basic physical laws of matter and energy as they shrink. BC Companies: none that I know of...

14) Optoelectronics

I added this to Dr. Carty's list. While it is certainly important today, with optical network devices and fiber optics becoming commercial successes, the future is also bright (pun intended). Controlling and directing light is cleaner and much, much faster than electricity. Research here continues into using less electronics and more optics. Future commercial success in telecommunications is obvious. But, optoelectronics has other commercial possibilities in semiconductors or, as in Creo's case, in the printing business. BC Companies: Creo Products

Remember, this list is of technologies of tomorrow, not today. One glaring obvious omission is anything to do with software. I believe that as a cutting edge technology of the future, software is too broad. Of course, software is rapidly becoming (already became?) the most important industry in the world. It's prevalence in our society is truly massive. Don't believe me? Just look at the Y2K problem and its scope. Ask why Microsoft has a market capitalization larger than the big three automakers, combined!

One last point: research and development of new technology is exciting. But technology itself does not make a successful company. There are plenty of "cool" technologies in the trash heap of history that for a variety of reasons failed to create the market opportunities. Discoveries and innovation are only the beginning of the commercialization process. To become a massive company in a huge market takes a lot of managerial skill, a whole lot of money and a little luck (which I prefer to call fortunate timing).

I can't wait to hear who or what I left off the list.

Random Thoughts - Last week's column was a bit of a departure for some readers. See below for responses. Of course it was meant to be tongue in cheek. Some people missed that nuance. I have an excellent article on what a VC wants to see in a company that I will add to my on-line venture capital guide. It's at
Congrats to Pivotal Software for being in the Upside Hot 100 Companies (http://www.upside.com/texis/mvm/story?id=352ac0090). That's excellent exposure in the U.S. financial marketplace.

Responses from last week: Almost the entire Board of the TIA responded to what I wrote. I'll include three of the responses here:

As a member of the TIA report's steering committee and one who shares responsibility for the report's content, I want to say "thanks" for the ideas you put forth. I particularly like the part about the IEEE being in power, and the TSE index at 40,000.

Let me deal with the question, now publicly-raised, of why there wasn't a venture capitalist on the podium last Wednesday evening. First of all, it took us, that is the 6 TIA board members, Ernst + Young and the T-D Bank, over 8 months and more labour that you care to imagine to compile this report.

Do you really think that VW, WOF, Western Seed or others would have gone through that process with us ? I, personally, do not. Now that we have done the legwork and driven a stake in the ground about the industry's characteristics, we will have no end of collaborators bellying up to the bar to assist in the report card's annual review. Perhaps you'll be one of them.

Judy Bishop

-- My hand is still raised.

A great piece of wit - with a purpose. We have something kindled, and it is up to all of us, in many varying ways, to push for change. Your article is very useful as it suggests what success could look like ten years out. Thanks for doing it.

Tom (can't count for trying) O'Flaherty

-- Ahhh, someone found it witty.

I read your piece following up on our release of the "1997 Report Card" with a huge smile on my face. Some thoughts below....

My only disappointment is that you did not mention your April 2007 conversation with me, Chairman of Silicon Slopes Bank, and one of the co-authors of the original report card of '97. Back then Steve was head of technology industries for TD Bank in BC - remember them before the big bank mergers of '98? Gee, wonder what ever happened to those banks that were going to be so big, after the sell-off of their technology industry groups because it was non-core business?

We would be happy to have V/C input and support for the report card project in future years.

Steve Hnatiuk

-- Sorry, I left that salient point out. Interestingly, John Bruce (also a TIA board member) was glad to have the lofty title I bestowed on him in the article. A couple of people phoned him and thought that it was true in the present.

Brent, good column! I enjoyed the fresh perspective even if it is wishful thinking on my part!

The reason I'm writing is I'd like to invite you to comment on a proposed Bachelor of Technology program we are working on in Electronics. The focus of the degree is applied technology training, much like the Engineering Technologists we are currently producing.

The proposed program is designed to allow Electronics technologists working in the Electronics industry to pursue their degree part-time while continuing to gain valuable work experience. The intention is to make the material being studied immediately relevant to their work. Our goal is to involve as many "experts" from industry as possible to deliver the course material. An industry-sponsored project is a key component of the degree.

Glenn Pellegrin, BCIT

-- I thought I might have irked a few instructors and professors with my comment about who will teach the 500 new students in high-tech in BC. I was not referring to the talent of the instructors, but more to the fact that we would need more of them and Mr. Petter neglected to say where they were coming from. Nice to see that there are some initiatives towards a co-op program. I would love to help, Glenn!

What Do You Think? Talk Back To Brent Holliday

Something Ventured is a bi-weekly column designed to supplement the T-Net British Columbia web site with some timely, relevant and possibly irreverent insight into the industry. I hope to share some of the perspective and trends that I see in my role as a VC. The column is always followed by feedback (if its positive or constructive. I'll keep the flames to myself, thanks).

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