Mendeley is one of the biggest successes of the Eurostars programme, an instrument put together by 33 national innovation agencies in Europe and the European Commission, using public funds to finance market-oriented research projects. Eurostars projects are set up by companies and universities collaborating across Europe and are always led by a small or medium enterprise (SME). Mendeley received its Eurostars grant in 2009; four years later, it is now a confirmed member of the global start-up scene, and a success story widely advertised in the Guardian, the New York Times and on the BBC.
More than a successful start-up, Mendeley is the pioneer of a movement to make science more open and facilitate collaborative research through technology. Before 2000, the vast majority of research papers were only available via subscription, today over half of all research papers are available through open access, on websites like Mendeley. Through Mendeley, researchers can manage the entirety of their libraries and references, and collaborate with other academics in groups.
Three young Germans, Victor Henning, Jan Reichelt and Paul Föckler founded the company in 2008. Their motivation was to solve a problem they experienced as researchers; how to manage, organise and annotate the hundreds of different documents needed for their theses. A guest lecturer at the business school that Reichert and Henning were attending at the time was Stefan Glänzer, a successful investor in web-companies.
‘MENDELEY RECEIVED ITS EUROSTARS GRANT IN 2009, FOUR YEARS LATER IT IS NOW A CONFIRMED MEMBER OF THE GLOBAL START-UP SCENE.’
Glänzer is known for his involvement in last.fm, a music website based on an automated recommendation system. He was immediately hooked by what was going to be Mendeley’s pitch: a free software to manage and share research papers, coupled with a social media-type website, connecting like-minded researchers, and showing them real-time research trends in their own scientific disciplines. ‘It was one of those rare situations when the decision to invest or not in an idea took me less than 60 seconds,’ says Glänzer. ‘When they contacted me and explained their plan, I knew immediately that this was a great one.’
Around the same time as they received Glänzer’s offer, Reichelt and Henning decided to apply for funding from Eurostars. Eurostars’ main purpose is to help small companies in the high-tech sector to deliver marketable products by collaborating with their European counterparts in the research sector. Sounds attractive, but with its finances well covered from the outset, why did Mendeley seek public subsidies? Jan Reichelt, now Mendeley’s President, answers that question: ‘We knew we would have to face big challenges and the only way to overcome them would be to get more knowledge into the company. That is what Eurostars helped us to achieve.’ The programme’s contribution wasn’t just financial.
Eurostars was, in Reichelt’s own words, ‘a good introduction to public funding’. The simplicity of the programme and its flexibility made it stand out from other options. ‘We did not need to adapt our application to the scope of the call, simply to describe our business plan and how we wanted to reach the market and make profit,’ says the young director. To receive funding from the Eurostars scheme, a research project must involve at least two participants from different European countries. Mendeley collaborated with programmers from Austria and Estonia, which helped the young start-up to stay ahead of its competitors by developing strategic technologies faster than any of them.
One of the many things the company managed to achieve through the Eurostars collaborative model was the development of a scrobbling technology. Similar to the technique used by Glänzer’s last.fm, scrobbling is a neologism referring to an algorithm allowing users of a web service to share similar interests: for every research paper in Mendeley, one knows how many readers the document has, where they are from, what their academic disciplines are and what else they are reading.
'WE DID NOT NEED TO ADAPT OUR APPLICATION TO THE SCOPE OF THE CALL, SIMPLY TO DESCRIBE OUR BUSINESS PLAN AND HOW WE WANTED TO REACH THE MARKET AND MAKE PROFIT.'
When asked for his opinion about Eurostars, Glänzer is confident of the key role public funding can play when it comes to innovative businesses: ‘From my observations, the whole research sector relies on government funding,’ he says. ‘Public funding programmes like Eurostars should play an essential role in kick-starting innovative companies, and then the following stages should be supported by private investors.’
A NEW MODEL
In the world of academic publishing, Mendeley has been a real disruptor, a position that has attracted interest from major players in that space. Initially, however, the company chose to partner with experienced tech investors: Eileen Burbidge and Taavet Hinrikus, two of the company’s main backers had been early employees at Skype and oversaw its strategy and product development.
Mendeley’s performances remain unmatched. Last November it hit the two-million user mark and is now host to 340 million documents. Most of its services are free, but it generates substantial revenues through a model where users can buy access to greater storage capacity or the ability to create larger collaborative groups. In addition, the Mendeley Institutional Edition was launched in 2012 and has already been adopted by some of the world’s most prestigious institutions such as Stanford and the VTT Technical Research Centre of Finland. Mendeley has closed a recent round of funding which considerably increased its financial resources. Investors included Access Industries, Tom Glocer, former CEO of Thomson Reuters, UK-based Andurance Ventures and Passion Capital, of which Glänzer is a founding partner.
‘Despite all the social media buzz, until Mendeley, there hadn’t been a real digital disruption in the academic market,’ Glänzer enthuses. ‘In the future, I think that Mendeley will become the operating system for how research is done.’ ‘Give us a few more years and we could become the Google of academic research’, says the investor.