Clean 15 Series: yet2.com
You can think of yet2.com as an intermediary, an opportunity-finder, or more to the point, a link between those who sell and buy technologies. yet2.com seeks to partner otherwise estranged companies to maximize the return on everyone’s investments. On one side of yet2.com’s business is helping start-up companies with licensing, technology evaluation and acquisition, business development and R&D needs. The other side is finding larger companies with gaps that can be filled by externally produced technology.
The concept is called open innovation, and it propels the notion that large firms can and should use external ideas (as well as internal ideas) to advance their technology. Because knowledge is distributed differently (that is, on a global scale), new thinking says that companies cannot afford to rely solely on their own R&D departments. Instead, they should integrate the practice of buying or licensing processes or inventions from other companies.
How it got started
Ben DuPont is the co-founder and President of yet2.com. After taking engineering in college, he spent 13 years with chemical giant (and family business) DuPont, making sense of the intellectual property and patent portfolio that DuPont had at the time. Among upwards of 22,000 patents, the company was only using 10 per cent of them.
It struck Ben that if a company like DuPont had this problem, then other large companies must have it too. “I figured that if we looked at all the technology others were developing, maybe we wouldn’t have to redundantly develop things and start-ups could create,” he says. And that’s what he set out to find.
“In 1999, I put a business plan together in to raise $6 million, and I had $48 million thrown at me,” laughs DuPont. “Of course, those were different times. We built the organization, which took a few years to iron out, and today we have 26 people and offices in Tokyo, Liverpool, Boston and I’m in Wilmington, Delaware.”
As one of the first companies to really get into open innovation, yet2.com has gained a strong footing in its market. While dealing with intellectual property and technology presents its own set of challenges, yet2.com closes about two deals per month. “We have closed about 100 deals since founding the firm,” says DuPont, “some of which have been instrumental to Canadian companies.”
One of said deals was between Axela Biosensors and Kimberly Clark, which launched Kimberly Clark’s biosensing platform technology (including 150 patents). Another was between Electro-Petroleum Inc. (EPI) and Deloro Resources. EPI’s technology set a new standard for heavy oil recovery that requires no water and less power, saving Deloro a lot of time and money. “It’s a big deal,” DuPont understates.
How has yet2.com managed to thrive in this fledgling industry? “One of the things we understand better than anyone else is who is looking for what technology,” he explains. “We have better intelligence. If a start-up comes in and says, ‘I have a great delivery technology,’ yet2.com is in a better position to connect them with a specific individual or company looking for that same technology.”
It just makes sense
Open innovation is a subject that DuPont is passionate about because it has two symbiotic benefits: “it is critical to the success of the economy and to the planet,” he says. “I think history will show that those who try to hold on to the closed innovation model will not be financially successful in the long term.”
DuPont’s reason for this belief is based on how the North American start-up community is evolving: “I’ll bet if you look at where the top engineering graduates got jobs in the 1960s, it would be at companies we all know, such as IBM, Apple and Boeing. But if you look at where today’s graduates are, I’ll bet they are at companies we have never heard of.”
“I think what’s happening is we are moving towards an entrepreneurial economy,” he continues. “Large companies are going to have trouble competing, because it’s hard to compete when the best the brightest aren’t working for you. You have to embrace open innovation in today’s economy, and that is easy to do with such a robust start-up community.”
Compared to other regions of the world, DuPont sees North America as having a more vibrant connection between universities, start-ups and large companies. “There’s a whole process for how entrepreneurs create companies and add value, and that’s valuable for our economy,” he says.
Harmony between ideas and capital
As yet2.com forges on, the company is confident of its future successes. When asked where he sees the industry going in a few years, DuPont says he thinks the industry will experience “an exciting time when there is less friction between new ideas, technology and money. It will cause explosive growth.”
He also believes large companies will have start-up “farms teams”, taking technologies that are not big enough to commercialise here and license them down to be commercialised in other markets. “Those large companies will look for regional discoveries and provide mass distribution for them,” DuPont forecasts.
As for what kind of technology we can expect, there likely won’t be any more distinctions for clean technology (green, more efficient technology). “Even now, it’s so pervasive,” DuPont says. “Who would intentionally buy a technology that pollutes and is more costly? People are looking for better, faster, cleaner and cheaper. I think clean tech won’t be called that anymore, it will just be called good investing and good business.”
yet2.com is a sponsor of Clean 15, a Canadian competition that converges clean tech companies, connects them to a network of Global 1000 corporations with identified technology demands, and works in collaboration with them to create profitable joint ventures and licensing opportunities.