Elsevier swoops on open science start-up Mendeley in £45M deal

Leading scientific publisher Elsevier is to acquire the cloud-based research management and collaboration pioneer Mendeley, a start-up founded by three German researchers frustrated by the difficulties of extracting the true value from traditional science journals in the digital age.

While some users expressed concern that Elsevier will undermine the open access ethos of Mendeley, both companies said the union will benefit individual academics and the research community in general. Mendeley users are set to benefit from Elsevier's full text content and global audience of ten million unique users a month, while Elsevier is getting access to Mendeley’s anonymised data - that will show it exactly what users do with its content once they have downloaded it.

Mendeley was among the winners of the Science|Business Academic Enterprise Awards in 2012 – an annual contest for university spin-outs across Europe. 

Research in the Cloud Computing Era

For Elsevier the lure of Mendeley is that its tools have unlocked the research potential of cloud computing, allowing academics to manage and annotate documents, create citations and bibliographies, collaborate on research projects and network with researchers on line.

The spur for Mendeley CEO Victor Henning and his two co-founders Jan Reichelt and Paul Fockler to form the company was the problem they faced as PhD students, sifting through mountains of research papers. “Every academic has hundreds of PDF files that they need to manage for their research,” says Henning. While Henning was working on a doctorate in psychology at Bauhaus University of Weimar, Reichelt was researching information management at the University of Cologne, and Föckler was doing a PhD in computer science and media system science, also at Bauhaus University.

The tools Mendeley’s founders developed to address their personal frustrations with manipulating research data now enable academics around the world to drag and drop papers into cloud-based folders and create fully searchable, personal research databases. “Mendeley takes PDFs and turns them into a structured database that is easy to search and sort and filter,” Henning says.

The trio started the company as a way of earning money to supplement their academic salaries, but soon realised the huge potential in the idea of crowd sourcing. If millions of scientists were to use Mendeley, “It would be an incredible database of research that would not have been available before,” says Henning.

Global research collaboration

This side project has now grown to be a global research collaboration platform and academic database.  Since its launch in 2007, 2.3 million users have signed up to Mendeley’s service and 380 million documents have been uploaded.

Though the founders started Mendeley with their own funds, the company has attracted significant venture capital and angel investors, including Ambient Sound Investments, the VC fund established by the founders of the Internet phone service Skype. Other backers include Passion Capital; Access Industries - the financiers of Warner Music Group;  Andurance Ventures; and individual angel investors like Tom Glocer, the ex-CEO of Thompson Reuters; and academics at Cambridge and Johns Hopkins University. Mendeley also received public funding from the Eurostars programme, an innovation-focused instrument led by the Commission and national agencies.

Last year, after it launched another funding round, Mendeley received acquisition offers from several publishers. But the real deal came through from an existing discussion between Mendeley and Elsevier on possible partnership opportunities, which developed into a potential sales discussion late last year. The value of the deal was a reported £45 million, but the two companies refused to confirm the price.

Not out of the blue

Elsevier had attempted to create a similar service in-house, called 2collab, but it failed to get the same level of take-up as Mendeley, and was dropped in 2011. “The deal did not come out of the blue,” Henning told Science|Business. “After Elsevier shut down its social bookmarking service, the 2collab team collaborated with us to build a data import tool, and then sent clients our way.”  When Mendeley launched its application programming interface Open API, Elsevier was the first major publisher to use it to build a Mendeley readership app.

This prompted discussions about a possible partnership. "There was so much overlap in our interests that we decided to go for an all-in approach. Together we will be more than the sum of the parts,” Henning said.

Both Elsevier and Mendeley say the acquisition will benefit the entire research community. "A big problem for Mendeley has been gaining access to full text content of articles," said Henning. Joining Elsevier - owner of Scopus, the world’s largest abstract and citation database of peer-reviewed literature - means that Mendeley users will have better access to full content.

Scopus incorporates citation trackers and author profiles, whereas new users of Mendeley have to build their citation profiles from scratch. The promise is that there will be a single log-in process for both Mendeley and Elsevier tools, giving Mendeley users seamless access to Elsevier’s content and workflow tools.

What users do with content

Elsevier will benefit from Mendeley’s ability to track what users do with content. Through anonymous datasets, Mendeley knows who the users are, what they are reading, what pieces of an article they highlight, and who they are collaborating with. "Elsevier has the best content in the business but it is hard for them to know how this content is being used. Mendeley's social information will enable Elsevier to produce better content and tailor future content decisions," said Henning. 

While Elsevier promises Mendeley will remain a separate platform with its own distinctive brand, Henning says the deal will allow it to take a long-term perspective that was not feasible for a start-up “With Elsevier's resources, we will no longer have to charge users right away in order to break even. We can focus on bringing our service to a wider audience," he said. 

One of the first moves to do this will be the development of an Android app and plans to launch a revamped iPhone app in the coming weeks.

The sale is effective immediately, with all of Mendeley's 50 staff staying on in the London office and plans to extend the team to 85 over the next 18 months. Some Elsevier staff will join the London office, bringing marketing and technology expertise. The founders and key management staff will stay on, with Henning becoming vice president of strategy for Elsevier, aiding the integration between the two offices.