Nanosys Raises $25 Million, Unveils Three-Pronged Deal with Samsung

8/10/10Follow @wroush

Palo Alto, CA-based Nanosys, the nanotechnology startup that has struggled to regain altitude after a high-flying debut in 2001, is switching on the afterburners this week.

To finance a move to a larger facility where it will have more space to manufacture its nano-engineeered materials for lighting and digital displays, the company is about to close a $25 million Series E venture round, with $5 million more potentially to follow by October 1, CEO Jason Hartlove told Xconomy on Monday.

Samsung, the South Korean electronics giant, is supplying $15 million of the new equity investment through its affiliate Samsung Venture Investment Corporation. The rest is from the company’s existing investors, and the $5 million second tranche is reserved for new investors. [Correction: In an earlier version of this paragraph, the second tranche amount was listed as $10 million.]

At the same time, Nanosys is announcing two other agreements with Samsung. There’s a multi-million-dollar licensing deal that will give Samsung access to Nanosys technology that could help it manufacture more efficent thin-film solar panels. And Samsung will also fund work at Nanosys to develop new quantum-dot crystals—the core of the startup’s technology for lighting enhancement—that don’t contain cadmium, a toxic element whose use is restricted in Europe and other regions.

The deals are critical ones for Nanosys, which wandered for years without a commercial product and brought in Hartlove as a turnaround CEO in 2008 (see this July 21 profile). The agreements give the startup more resources to expand into the two markets—displays and batteries—where Hartlove believes it can most quickly commercialize its own work, while at the same time allowing it to cash in on unexploited parts of its patent portfolio, particularly in solar technology. “This is a strategically important deal for us,” Hartlove says.

Gearing up to move to new quarters has been one of Hartlove’s highest priorities. The company has won a contract to supply the quantum dot phosphors inside the “QuantumRail,” a component that increases the brightness and efficiency of LED backlights for mobile device displays, to Korea’s LG Innotek, and is pursuing additional customers. That means it now has to make the phosphors in industrial quantities. But in its current location—tucked into a Palo Alto office park with burgeoning Web and software companies such as Facebook a stone’s throw away—the startup is “basically out of capacity, really footprint-limited and fire code limited,” says Hartlove.

The company will use the growth capital round to open a new facility in a larger industrial park. “It’s here, still, within the Bay Area,” Hartlove says. “We haven’t announced a site yet, but that’s what the new capital is for, the capacity expansion to meet our 2011 revenue goals.”

The next problem is an environmental one. Manufacturers of smartphones and notebook computers can use the QuantumRail technology to tune the frequencies emitted by the LED backlights in their liquid crystal displays, resulting in a far richer range of colors. But there’s a downside—the quantum dots, which are actually nanocrystals made of cadmium selenide. Cadmium is a … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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