The following white paper was recently shared on OSF Preprints
via OSF Preprints
Innovation can be defined in many different ways, and can originate both from within existing organizations and from new entrants in a sector (e.g. startups). As with innovation, there are different views on and definitions of the term startup. In general, only two out of ten startups are expected to live up to their expectations and grow. Over the years, many names of new entrants in research workflows and scholarly communication have appeared. What has become of these hopeful new entrants and their products, services, and tools? This Fall, market research was conducted and three questions were investigated: 1. Did they still exist (independently) in 2018? 2. If so, how were they funded and how were they doing? 3. If they were acquired by 2018, by whom and when were they taken over?
To systematically create a list of the new entrants, a range of approaches and sources were used. This resulted in a long list, which was shortened to a sample of 120 independent for-profit startups through various filtering exercises. To answer the three research questions, various approaches were used: desk, literature, and web research; qualitative research (mostly interviews and personal communication); and index research (i.e. Crunchbase and TNW Index).
The most striking first conclusion is that a solid 120 independent for-profit startups were found for our sample, indicating noteworthy autonomous innovation.
The sample used was neither complete nor representative of all new entrants in research workflows and scholarly communication, but proved to be an interesting subset to provide answers to the three questions investigated. The conclusions are thus explicitly valid for the sample only.
Another interesting conclusion of this market research is that the vast majority, 92 of the 120 startups in our sample, was found to exist independently in 2018. Less than a quarter (21%) was acquired by another organization by 2018 (two were acquired twice).
For the startups that existed independently in 2018, the second research question investigated how they were funded and how they were doing. In terms of funding and revenue, impressive funding and revenue numbers were found: ten startups with more than USD 25 million in funding, and seven with more than USD 10 million revenue (29 with more than USD 1 million revenue). It is however important to note that, through private conversations, it is known that many startups do not disclose (revenue) numbers, and that the Crunchbase data are subject to a spread of accuracy.
For the 25 startups that were taken over by another organization by 2018, we found that the overall average amount of time between a startup’s founding and its first acquisition was five years, in line with startups in the financial sector. A great variety in the activities of the acquired startups was found, as well as in the acquiring parties.
The vast majority (67%) of the 27 acquisitions were carried out by a party that did not come from a scholarly publishing background. The nine (33%) acquisitions made by publishers show a variety of players, with six different actors in total.
The third prominent conclusion of this market research is that the acquired startups were definitely not all taken over by the big STM players.
The market research leaves questions for further research and invites discussion of possible moderators for success, given the debate on current topics in our sector, for example (technical) disruption and the Joint Roadmap for Open Science Tools.
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Hat Tip: LaList