Steve Jurvetson has found The Next Big Thing in technology investing – only it’s very, very small.

Jurvetson, managing director of Silicon Valley venture powerhouse Draper Fisher Jurvetson, put the hard sell on the crowd at Venture 2002 Wednesday, talking up nanotechnology with the fervor of a preacher. To him, the Gospel of Nanotechnology is a revolutionary concept on par with the computer, one that will change the information technology, life sciences and materials sciences industries.

He has a lot invested in the idea already, both professionally and personally.

DFJ has put money behind six companies experimenting with nanotechnology applications, and Jurvetson serves as chairman of the NanoBusiness Alliance, a New York-based group that promotes the industry through research and education.

“Whether it happens in the next few years or is still 10 years out, nanotechnology will be a great investment opportunity,” he says, adding that the current market provides venture firms with their best investing opportunities in the past decade.

The concept involves manipulating atoms to create circuits, relays, even machines, that are 1,000 times smaller than current microcircuits, allowing for the continued trend of smaller, more powerful electronics and new devices that don’t occur in nature and could never be synthesized in a laboratory. But the size of the devices – or more precisely, the lack of size – makes powering and controlling them a challenge.

Jurvetson says there are two solutions to that problem: Either wait for computer chips to eventually shrink to that size or use biological engineering to interpret and control molecular activity. He seems especially enamored of the latter, saying biology is inspiring many developments in IT.

“This (technology) isn’t like software, where Microsoft tries to engineer it and works to get all of the bugs out of the system,” he says. “You just have to accept that it has biological flaws and develop your system around it.”

He draws parallels between the emerging industry and the biotech sector, where small companies help drive the research efforts of big pharmaceutical firms. Large industrial firms aren’t ready to partner with nanotechnology companies, he says, although such collaboration will take place eventually.

In the meantime, venture firms have to sort through the companies to determine which may be good investments and which are “science projects” that are better candidates for government research grants, Jurvetson says. The more impatient investors might want to look for near-term revenue potential through instrumentation or bulk materials applications, he says.