Funding in nanotech remains steady in 2024 as investors eye the next wave of innovation.
January 23, 2025 (Preqin News) – AI may be dominating venture capital (VC) funding right now, but investment continues to trickle into other disruptive technologies, including nanotechnology. Preqin data shows nanotech start-ups raised $1.5bn across 123 deals in 2024, up on the $1.1bn raised in 148 rounds in 2023.
Early stage was most favored by investors in the past year (where disclosed), with 24 A rounds, followed by seed (20) and series B (18).
The number of deals in nanotech each year has consistently topped 100 since 2018, while total deal value in the sector has exceeded $1.1bn for the past five consecutive years. Deal value surged to $2.7bn and $2.4bn in 2021 and 2022, respectively, as the VC market boomed, but has since dropped back to be more in line with pre-pandemic investment levels.
Nanotech has the potential to transform the cleantech, digital, medical, and manufacturing sectors. Despite being overshadowed by the AI boom, investors appear keen on its expanding applications.
China leads the way in VC deal-making with 36 nanotech transactions in 2024, while US-based investors made 23 rounds. China-backed deals peaked at 59 during the pandemic when it invested heavily in innovation to grow the economy, compared with 43 deals made by US investors.
Over the past five years, Germany’s High-Tech Gründerfonds has been the most active early-stage investor in nanotech start-ups globally, with 10 rounds. US-based 8VC and Sequoia Capital follow with seven investments each, while the latter is the most active series A investor with six rounds.
Nanotech has developed rapidly over the last few decades from a research area to an innovative technology with broad commercial appeal. It manipulates microscopic atoms and molecules at the nanoscale to create new materials and devices with diverse applications.
Interest in nanotech’s significant impact on society has been reflected in fundraising. Preqin currently tracks 432 funds closed, with an aggregate capital of $67bn, that consider investing in the nanotech sector either solely or as part of a broader focus.
In 2024, 12 funds closed with an aggregate $1.2bn raised. Currently, 59 funds with exposure to nanotech are in the market, seeking a total of $7.9bn.
Some VC investors have raised funds focused on investing in nanotech start-ups. In May 2024, Imec.xpand closed its second fund at €300mn, targeting the growth of AI-related semiconductors and nanoelectronics.
VC investors have focused on nanotech for the design of electric cars, cutting-edge medical devices, next-generation materials, and semiconductors, to name a few. Increasing demand for products and processes that are faster, lighter, smaller, and more accurate, durable, and sustainable means the nanotech market is likely to expand.
Key drivers for investment include the potential for high returns and opportunities for disruptive innovation and tackling major societal challenges, including the energy transition and climate change. However, some investors are concerned about the regulatory hurdles, the high cost of R&D, and the potential health and environmental risks linked with nanomaterials.
The US National Institute of Standards and Technology (NIST) says nanotech could be key in reducing greenhouse gas emissions and reaching the global target of net zero by 2050.
In an article published on nature.com in October, scientists from NIST, the US Department for Energy, the Environmental Protection Agency, and other researchers concluded: ‘There is a unique opportunity for nanotechnology to contribute to this goal by focusing on high-emission sectors such as buildings, electricity, industry, and transportation. Urgent action is needed to rapidly scale up and implement new climate solutions, drawing insights from successful nanotechnology applications.’
The opinions and facts included within the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin providing the information in this content accepts no liability for any decisions taken in relation to the above.