Digital science startups (of which you can find a long list here) are playing a major role in the development of the research ecosystem of tomorrow. They are the creators of digital tools developed with researchers in mind, and that are redefining how researchers communicate with each other and society, and how research is conducted, analyzed, and evaluated.
With the development of cloud technologies, the number of digital science companies has grown rapidly over the past 10 years. I have had the opportunity to mention some of this in a report I wrote in 2015 for the European Commission. Digital science companies have emerged, typically founded by researchers frustrated with some aspect of academic research. The digital science industry is increasingly being funded by publishers that are realising they must evolve their business model away from publishing and towards innovative services for researchers (see figure below).
But although the importance of digital science companies is now rather clear, there is limited data available about them. We launched our Digital Science Industry survey with the goal to have a clearer picture of what the digital science industry looks like. What type of organizations is this emerging community formed of? How well are they doing? How do its actors see the future? And how can Connected Researchers and others like LabWorm.com alike help? This post summaries the responses of the 42 digital science companies that responded to the survey.
We first wanted to know who the participants were. We will not disclose the name of the companies that chose to identify themselves, but will give an overview of of their main characteristics.
We asked when their startup was founded. Most of the respondents were startups founded after 2010. The sample collected matched well the strong growth in new digital science startups since the mid 2000s. One respondent was founded as early as 1952. On average, the companies represented in this survey were founded 6 years ago, with a standard deviation of 10.5.
We then asked how long it took them to release their first finished product. This provides an idea of what type of development time one should come to expect for digital science products. Most of the respondents said it took them between 6 and 12 months to launch their first product. With a long tails of responses up to 72 month development time.
People are the most important assets of companies. We asked about the number of founders the companies. Most companies declared having two founders. One reported having 37!
Founders can do a lot by themselves, especially in software companies. But with a little bit of luck, they might quickly need to recruit employees to help develop their product. We asked about their number of employees they had initially and currently. Many of respondents started without an employee (21 %), but a large fraction started with one (31 %) or more than one (48 %) employees. When looking at the present situation, the distribution is clearly changed. Two groups appear: those that stayed with less than 5 employees and those that have 10 or more. On average, the companies interviewed increased their number of employees by 1.56 every year since their creation.
We also wanted to know more about the financial situation of these companies. The following responses are also important metrics to understand the stage of development of the companies. We first asked whether they are for profit organization. A majority (69%) responded they were, while 26% that they were not.
We then asked a few questions about their fundraising. First, we asked the number of funding rounds the company had been through. A large fraction (42 %) of the respondents had yet to have raise funds.
Over half of the respondents told us how much funding they have raised since their beginnings. There was a wide spread of investment sizes amongst the companies that responded, which may reflect the stage of development of the company, the variability of their financial needs, or in their success to attract funding. A majority have raised 100,000 USD or less. However within this group, 26 % of the respondents had not raised funds to this day.
When asking what the companies funding sources were, we learned that digital science founders are using the full spectrum of potential funding sources to run their activities. Most of the companies that responded were running on personal funds. Institution such as research funders, and public investments organization were second. Angle investors and venture capital firms (VC) were third and fourth, followed by banks.
Once funded the startups are able to build their product and start attracting users. We wanted to find out how many users these startups typically attract. In other words, how big of a market can these new digital science companies capture? In the early stage the users are typically counted in the hundreds. While a year later, the distribution is shifted towards higher numbers. Several reported tens of thousands of users.
We also asked how many users they had today. There was a wide spread of answers, some receiving a few hundred users, others a few millions! Although many tools are struggling to find their users, this survey shows that digital science tools do have the potential to attract users by the millions.
Returning users are sign that the service is of real use to the user. It is a good complement to the absolute number of users. It is not always an easy metrics to obtain, which may explain the relatively low number of respondent to this question (24/42). The results showed a large spread of results, which is probably due to the diversity in the development stage and type of products offered by the respondents.
We next wanted to understand the size of the market as estimated by the companies as well as their level of optimism for the future. We asked about their projected user growth. Most foresee very significant growth in the next year. None reported a zero or negative growth projection.
We see that some of these startups can actually attract large numbers of users. But how does that translate financially? We wanted to see if these startups were already generating some sort of revenue. Most of them generated less than 50 k$ with 13, generating no revenue.
However a large majority confirmed they do intent to generate revenue in the next 2 years.
We next asked about how these companies are developing. First, we asked about the challenges these companies face. The challenges seemed to be quite company-specific. However a common trend emerged. Brand awareness and user adoption seem to be some of the most challenging aspects for this industry. This is not so suppressing when considering that these companies are young, small, and rely on users to drastically change their work habits. Financing was also judged as a challenge by most respondents, which is rather common for small startups, most of them declared to be self-financed.
On the other hand, the companies did not report that technical difficulties nor competition are major hurdles for their development. Meaning that there seems there are enough niches in digital science for these companies to co-exist and that the existing technologies are mature enough to support the development of interesting new products.
Several initiatives such as Connected Researchers are working hard to raise awareness about digital tools for researchers. However the level of awareness is still generally low, and digital science companies need to invest significant resources in their own outreach programs. We asked what communication channels these companies are using to raise awareness and market their products. Most relied on the word of mouth and social media. But the more traditional conferences and lab visits seem to be still effective channels to target academics.
This survey provides a good overview of the identity of digital science companies and of the challenges they face. We think that it might be important for such companies to have access to a digital space that can them face these challenges. A digital science tool developer community could discuss to set standards, strategic goals for the industry, develop new collaborations, raise awareness, and lobby for funding and science policies that are friendly to them. Such a platform would require a strong and engaged digital science community. And so we asked if the companies felt part of a digital science community? Most companies said a definite yes. But the spread was large.
Those who responded yes might be feeling that way because of existing collaborations or partnerships they have with other tool developers in the industry. And indeed 27 of the respondents said they had or are collaborating with other toolmakers.
We at Connected Researchers are doing our part to raise awareness around digital tools for researchers. But in the mind of the companies, how useful is Connected Researchers (or thelike) to researchers? Apparently pretty useful!
But Connected Researchers and other platforms such as Labworm could become more than this. They could become the hub around which a digital science community could come together. Most companies replied said they would engage in such a platform and enjoy showcasing their tools and connecting with users.
Please do comment and get the conversation going about the results of the survey. Missing pieces of information, alternative analysis, or other comments and feedback are most welcome.