The IDEAGORA – an emerging innovation trend

Presenting three leading examples

June 2008

• Why are Ideagoras growing• Update on 3 leading Ideagoras:

• Summary• Opportunities for the IAS

Agenda

Why are the Ideagoras growing?

Background• Founded in 2000• They source innovative solutions for their clients

by using a global network of Solution Providers • First 100+ Request for Proposal (RFP)

documents were on behalf of Proctor and Gamble

• 500 RFPs posted up to end 2006, 400 RFPs posted in 2007

• Network has grown to 1.5 million+ solution providers; • 100+ registered Affiliates - hundreds more in

the pipeline• Reachable network size is 575K+ innovators;

growing exponentially• More than 75 countries represented• Broad range of technical disciplines…

chemistry, materials, electrical/electronics, packaging, food, formulation, consumer preferences, health/life sciences, renewable energy and more

• Many large organizations are registered as Solution Providers as well as Innovation Seekers

What they do– Proprietary Process, project managed by PhDs

• Client typically pays an up-front fee of $15K* per RFP with risk sharing “success commission” based on paying Nine Sigma a percentage of the final contract value.

• RFPs are sent by e-mail notification each week to registered Solution Providers and Affiliates

• Solution Providers are offered a prize for the best solution(s) generally ranging from $5K to $50K

Working collaboratively on needs definition for your RFP

Dedicated, expert program managers

Simultaneously stimulating internal resources

• Broadest sources of solution providers in government, private industry, academia and individuals

• Via our unique innovation network

• We find un-obvious solutions, cost-effectively

• Manage confidentiality

• Reach new partners and you go forward through best options

* 2007 price figures

www.ninesigma.com

• 3 key take outs– Rapid rate of growth of solver base, primarily

through Affiliates. Nine Sigma are actively seeking innovation “hubs” (Innovation Alliance Program)

– Large client organisations have had some big successes through Nine Sigma and are expanding their agreements, increasing the number of RFPs

– Many of the transactions are between large companies with complementary capabilities and strong IP awareness

Background• InnoCentive was started by Eli Lily, in 2001. • InnoCentive connects companies, academic

institutions, and non-profit organizations with a global network of more than 145,000 of the world's brightest minds.

• Aims to Become the “Google” of the innovation search

• Solutions have come from more than 30 countries

• Over 550 postings for innovation challenges since starting, 192 awards to date.

• Recognition is given to successful solvers on the InnoCentive website

• InnoCentive is also innovating the way it markets itself e.g. use of Youtube

What they do• Innovation challenges are now segmented

into 4 categories; Ideation, Theoretical, Reduction to Practice (RTP), and electronic Request for Partnership (eRFP),

• the cash awards for solving challenges are in the range $5,000 to $100,000 (but can be as high as $1m). InnoCentive have so far paid out over $13m in prizes

• As with Nine Sigma, there is an initial posting fee which varies according to the type of challenge but is in the range of $6,000 to $15,000. There is also a success fee based on the value of follow-on contract or award value

• Innovation Challenges are sent by e-mail to Solvers once a week

www.innocentive.com

• 3 key take outs– Extremely rapid growth (45% per month) of solver

base, number of challenges and value of awards– Emphasis on marketing to solvers at least as great

as to seekers– InnoCentive are keen to expand their base and are

aware that to do this some solvers will need IP support

Background• Founded in 1999

• To help technology companies realise value from their Intellectual Property

• Privately held, worldwide organization - Offices in USA, Europe & Asia.

• Operate largest Global online marketplace for technology transfer.

• yet2.com internet presence is a unique resource to facilitate deals –

– 120,000+ registered users, 40,000 companies, Network of 12,000+ smaller companies ($10-500m)

– 500,000 data points of known solutions

• “In-licensing “ and “out-licensing” IP for large companies and SMEs

• yet2.com has a network of subject specific consultants around the world and is working with government related organisations e.g. European Technology Network

• yet2.com closed 20+ deals last year and completed transactions for 10 F500 companies in Q4 2007.

• 71% of deals have been between companies from different industries

What they do• Buy-side (Technology Acquisition)

– Sourced innovation

– Patent acquisition

• Sell-side (Licensing / Technology Commercialization)

– Technology platforms for non-strategic applications

– Leading edge innovations from SMEs

– Patent selling• Strategy, Portfolio Analysis, Benchmarking, Deal

Facilitation

• yet2.com provides consulting support throughout a project and stays engaged in the deal-making process.

• yet2.com is very well placed to help companies acquire technology because it also helps clients exploit technology

• Typical client rates:• Membership fee $4,000 to $30,000• Consulting service fee $30,000 to $40,000• Success fee: % of value to the deal but capped

www.yet2.com

• 3 key take outs– Yet2.com are already a lot bigger than I thought

and growing fast– The yet2.com service is predominantly leading to

cross-industry deals– Once again, as with Innocentive and Nine Sigma yet2.com are looking for “hubs”

Comparison chart

Network Size 1.5m+ 575,000 individuals100+ Affiliates

+145,000 Solvers, 175 Countries, 40 Disciplines

120,000 registered users, 70+ brokers, 200+ consultants

How they make money

Posting Fee$15,000Success fee = % of final contract(Retainer)

Posting Fee$6,000 to $15,000 posting fee*Success fee = % of contract or award

Membership fee $4,000 to $30,000Consulting service fee $30,000 to $40,000Success fee = % of value of the deal

Solver/Solution Provider awards

$5,000 to $50,000 plus follow-on contract value

$5,000 to $1m Contract or licensing value ($1.5m average)

Growth 500 RFPs to end 2006400 RFPs in 2007

2007 postings nearly double 2006 postings

20+ deals in 2007, 10 F500 deals in Q4, 2007

* 2007 price figures

Summary• This is a globally distributed marketplace which is

growing very quickly and delivering results– Until recently, the size of the marketplace itself was a

limiting factor, putting off many organisations from engaging in it.

– Seems to be approaching a tipping point for many large organisations as the success stories spread

• All three Ideagoras are actively looking for “hubs” to connect with SMEs and individuals

• There is a large amount of innovation within the business model and offer from each organisation, so expect a lot more change in this area over the next few years