A Patent Dispute Helps Deliver Nanotech Startup into Bankruptcy

Recently I suggested that nanotech startups face a daunting landscape filled with obstacles that could make the going difficult, such as law firms, short-sighted investors, and NGOs looking for their next industrial boogey man.

In the most recent example of one of these small companies running aground against one of these rocks, New York-based Evident Technologies has filed for protection under Chapter 11 bankruptcy laws. According to the company, it has $4.8 million in debts and only $3.9 million in assets.

And what does CEO Clint Ballinger cite as the cause of this reorganization? The article says that in a statement Ballinger said the company had to file for bankruptcy because of mounting costs necessary to defend itself in an ongoing patent infringement lawsuit in Texas.

I am sure the company will come through this reorganization in a healthier condition. But one look at the company website and you have to wonder about the wisdom of pursuing four (LEDs, advanced materials, security and life sciences) quite distinct markets for quantum dots.

I would imagine succeeding in just one of these market sectors to start with is pretty difficult. I suppose the prevailing wisdom of pursuing four distinct markets in which it is likely that you don't know much about at least half of them is that you are spreading out your risk, or something like that. Companies like Evident that have a nanomaterial, in this case quantum dots, might benefit from focusing their resources in a market sector that they know the best. Or if they don't know any of them, to chose the most likely to be profitable.

In any case, it doesn’t appear from the published reports of the bankruptcy as though anyone indicated that spreading the company’s resources across four completely different markets played any part in the company's difficulties or its averaging “$10,000 of income per month, and $200,000 of monthly expense.” Ouch!

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