The fiber-maker was praised for its innovation, but found wanting in its delivery strategy. The eye scanner's makers had underestimated regulatory challenges and the difficulty of building a robust product.
Security companies need a good business model. "I don't see very many of those out there," said Buchanan, who identified sensor technologies for explosives, bioweapons and nuclear materials as one of the biggest gaps in the market.
'MORE ATTRACTIVE THAN CLEAN ENERGY'
While this year's $6 billion investment in the sector has been swollen by some big one-off deals, Venture Business Research director Douglas Lloyd said European interest had markedly increased, and a series of dedicated security funds had started to emerge.
"I expect investment activity in this sector to remain buoyant. And I also see this as a more attractive sector, as many do, than clean energy," Lloyd said.
"The failure rate of security businesses is much lower than clean-tech ones and, as importantly, the capital investment required to build a successful security business is also much lower."
With politicians and intelligence chiefs warning of a decades-long struggle to come against al Qaeda, security looks set to remain a growth industry.
Paladin's Buchanan rejected the charge often leveled by critics that the defense and industrial establishment has a vested interested in talking up the dangers.
"I'm not sure we can over-emphasize the threat. It's going to be with us a very long time. It is very deep and abiding. I don't think we're nearly at the point where the hype exceeds the need," he said.
KUDOS AND CASH
Phil Davies, marketing vice president for winning entrant NoblePeak Vision, said the company--funded by Matrix Partners and North Bridge Venture Partners--would use the kudos and cash to help it grow.
"The primary focus has been on the U.S., just to get things moving, but we've got enormous interest from the commercial security guys in Japan and well-known camera manufacturers," said Davies, who is also selecting a representative company to target British and European markets.
The camera core is priced at just under $3,000. Davies said a nuclear power station might typically require at least 50 of these, and an airport or university campus up to 100. The company's revenue is projected to rise to $70.6 million in 2010 from $559,000 in 2006.
With NoblePeak now on its second round of financing, he said winning the Global Security Challenge couldn't have come at a better time: "It's great bragging rights."
Memo to Q: no need to retire just yet.
(Editing by Richard Balmforth and Sara Ledwith)