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The markets in which we invest are changing rapidly as new technologies
emerge and as applications of existing technologies enable new segments
to appear. We are most interested in very fast growing emerging
markets, where we can invest in a company that can achieve dominance
of its niche. In addition, we are also interested in new products
and services that address very large existing markets where we can
invest in companies that are taking market share away from established
players. While we realize that three years hence we will be seeing
opportunities unknown to us now, the following are some examples
of the areas of investment interest we see today:
Information Technology
We continue to believe that information technology — including
web-based applications and services, software infrastructure
(including peer-to-peer infrastructure), data communications
and bandwidth enhancement, information services, and wireless
applications, services and technologies — represents
fertile ground for finding large, fast-growing markets in which
new companies can thrive. In aggregate, we estimate that such
markets have reached well over $2.5 trillion in size. As these
markets have developed, the pace of innovation and change has
continued to accelerate, creating a myriad of opportunities
for start-up companies. As the markets for information technology
products and services become increasingly global and therefore
increasingly large, the potential for building large, highly
valuable enterprises increases.
Nanotechnology and Life Sciences
We have entered a period during which the combined powers
of information technology, biology and materials science compound
the advances in each formerly discrete domain. We believe that
nanotech exposes the core areas of overlap in the fundamental
sciences. With the digitization of biology, technologists from
myriad backgrounds can decode and engage the information systems
of biology as never before, which in turn inspires new approaches
to bottom-up manufacturing, self-assembly, and layered complex
systems development. As we race to interpret the now complete
map of the human genome, and embark upon deciphering the proteome,
the accelerating pace of learning is not only opening doors
to the better diagnosis and treatment of disease, it is also
a source of inspiration for much more powerful models for computer
programming and complex systems development. Biology inspires
IT, and IT drives biotech.
As a consequence, in addition to information technology, DFJ will
consider investment opportunities in nanotechnology, bio-nano and
biomimetic innovations, MEMS, novel materials, molecular electronics,
medical devices and therapeutics, molecular diagnostics, bioinformatics,
agbio, bio-energy, and various platforms and tools. We believe
that nanotech may well be the next great technology wave, enabling
the next phase of Moore’s
Law to unfold. Recent developments in the capacity to understand
and engineer nanoscale materials have enabled the development
of new products that could not have been developed at larger
scale. Nanotech extends the digitization of biology to the
digitization of matter. As an umbrella term for a myriad of
technologies spanning multiple industries, we believe that
nanotech will eventually disrupt many industries over different
time frames. Today, tools and bulk materials are generating
revenue. Molecular electronics, energy storage and conversion,
and drug delivery and diagnostics are some of the areas of
active nanotech R&D. Therapeutic nanomedicine and machine-phase
manufacturing are probable future opportunities. Of course,
the safest long-term prediction is that the most important
nanotech developments will be the unforeseen opportunities,
something that we cannot predict today. Life Science investments. Nanotechnology investments.
Clean Energy Technologies
We at DFJ believe that the emerging field of clean energy
technologies represents another attractive growth market
for venture investing. The global demand for finite resources is
outstripping the global supply, resulting in increasing pricing
pressure and much more volatility in the availability and
prices of the inputs to many businesses, including fuels, electricity,
water and advanced materials. In addition, global competition
is forcing businesses to look for efficiency gains in their
operations, including the utilization and optimization of
the inputs to their businesses and the management of the outputs.
The demand for power has created significant challenges to
the existing grid infrastructure both in the U.S. and internationally.
Growing environmental concerns have increased the cost of
compliance. Power hungry applications on wireless devices (notebooks,
PDAs, cell phones, gaming devices, sensors, RFID tags, etc.)
are demanding improved energy storage systems. The size of
the energy market in the U.S. alone tops $1 trillion. The
current size of the clean energy market is $13 billion per year,
and it is expected to grow to $92 billion by 2013. DFJ is pursuing
investments in this category that overlap with our experience
in advanced materials and nanotechnology, novel processing
technologies and information technology. Categories of interest
include energy generation, transmission, utilization and
storage, water purification, grid optimization, industrial sensing
and monitoring, and advanced materials and catalysts. Energy and Clean Technology investments.
No list would be exhaustive; we like to keep an open mind and consider
unique opportunities. In general, we look for high gross-margin
businesses in large markets, not narrow niches. We are looking for
entrepreneurs who want to change the world. Perhaps the best way
to understand what we look for is to see a list
of the companies and industries that we have invested in so far.
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