Crowdcasting: Outsource your R&D for $50k and up

innocentive logWhat if your company had a niggling problem that you just could not solve? Why not turn the problem over to a hundred of the best minds around? And all for less than the cost of mounting the resources and trying to solve the problem yourself.

The idea of declaring a reward for a solution to an unsolvable problem, has been around since from the beginning of time. High profile prizes like the $10 million X-prize awarded to the first team to build a spacecraft capable of carrying humans to space twice in two weeks, have grabbed the headlines in recent times.

Now companies are springing up for the sole purpose of matching the bounty hunters with the big prizes, using “crowdcasting” as the means of finding the best minds.

InnoCentive, an Eli Lilly spinoff received $9M in Series A venture funding in a round led by Spencer Trask Ventures. Using the model of crowd casting, the company is posing problems for which major companies are willing to pay upwards of $50,000, to a set of experts. This appears to have produced new and innovative solutions, often put forward by people with expertise outside the immediate realm of the problem - a tough toxicology problem was solved recently, by a crystallographer.

So how beneficial is “prize philanthropy” concept? For the company posing the problem, it seems like a win-win situation. They benefit from having a Darwinian selection of ideas, from which the best solution wins. So how about the cost? While the prize has to be big enough to attract enough attention, the overall cost of the combined research going into the problem is very likely to be much more than the prize. For example, the amount of money that was spent by all the teams competing for the X-prize was well above the $10 M offered!

After open source, open expertise might very well be the next wave. What remains to be seen is who really benefits from the trend.

Company: Innocentive
Comany location: Andover, MA
CEO: Darren J. Carroll
Funding received: $9M
Investors: Spencer Trask Ventures, Lilly Ventures, Omidyar Network

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