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UPDATE: Nanostream Raises $10M to Build Custom Microfluidics Efforts

This article has been updated from a previous version.

NEW YORK, March 30 – Nanostream, a Pasadena, Calif.-based microfluidics startup is planning to infuse its product development efforts with $10 million the company just raised in a second round of financing, the company said Friday.

The cash, which augments $1 million the company raised last year in an initial financing round, will be used for R&D on what Hugh McManus, vice president of sales and marketing, calls “mass customization” of microfluidics devices. The company plans to market its devices to customers in the pharma and biotech sectors for use in genomics and proteomics experiments.

“We did an awful lot of market research with pharma and biotech, and they would like us to customize what we make exactly to what they need,“ said McManus. “We will provide a microfluidics operating system for the problems the customer might have.” 

As many customers will want to do hundreds or thousands of experiments with a single custom chip, Nanostream will then mass-produce this custom microfluidics product for them.

Nanostream, founded in 1999 by Steve O'Connor, the former chief scientific officer of Clinical Micro Sensors, currently has 24 employees, and about 7 or  8 customers with whom it is collaborating to providing the “microfluidics plumbing” for their instruments and devices, McManus said.

Microfluidics involves running miniscule amounts of fluid through networks of microchannels on a single surface. The channels take the fluid through the various steps of an experiment, simplifying and automating complicated laboratory experiments. 

Caliper Technologies and Aclara Biosciences currently market microfluidics devices contained in chips, but they are now being joined in the growing field by startups such as Nanostream and BioMicro, a Salt Lake City-based microfluidics company that raised $4.5 million in initial round of private financing this January.

Nanostream aims to distinguish itself from the pack through its strategy of customizing its microfluidics devices, and also through unique features of its technology.

“We use passive flow” to move fluids through the microchannels, said McManus. “Other companies use electrokinetic flow. This means you don’t have to dissolve salt into the system to help drive fluid, and you don’t have to have an external power supply imbedded into the device,” he said.

McManus said the passive fluid design helps in organic chemistry experiment, where it would not work to dissolve salt into the solvent. 

(BioMicro has also designed microfluidics devices powered by a pump rather than electricity). 

Nanostream has further distinguished its microfluidics systems by designing them in three dimensions, as opposed to a two-dimensional chip format that other companies use, McManus said. One prototype has over 15 levels, while the company can generally manufacture large amounts with five or six levels of channels.

An additional feature of the technology includes its module design. The company has pre-designed nano-modules, simple configurations of channels that have been optimized, and can be snapped together into different patterns to custom-build numerous microfluidics experiments. 

Techno Venture Management and AGTC Funds led Nanostream’s financing, with participation by Shamrock Capital. AGTC Funds of Cambridge, Mass. recently closed its first venture funds earlier in the month with $150 million in capital commitments.

McManus did not speculate on whether Nanostream would go public any time soon—it does not plan to launch a product until late next year.

But “since we have funding from venture capitalists,“ an initial public offering is “bound to be an exit strategy that’s near and dear to their hearts,” he said.

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