Reverse Shark Tanks : a new way to initiate partnerships for start-ups

In order for start-ups to sur­vive, it is cri­ti­cal that their inno­va­tive ideas pro­vide ans­wers to poten­tial cus­to­mer needs. Howe­ver, start-ups often struggle to match their solu­tions with poten­tial cus­to­mers, which delays their entry into the mar­ket. On one hand, start-ups find it chal­len­ging and expen­sive to iden­ti­fy mar­ke­table oppor­tu­ni­ties for their inno­va­tive tech­no­lo­gies and create net­works within that mar­ket whil­st still focu­sing on refi­ning their ini­tial solu­tion. On the other, poten­tial cus­to­mers can often lack the focus or expe­rience to iden­ti­fy poten­tial sup­pliers of inno­va­tive offers that are (or may become) able to satis­fy their future needs. In other words, it can be hard for both types of players to find a match out of the blue. This is par­ti­cu­lar­ly the case in bud­ding sec­tors that can be high­ly uncer­tain – such as the drone industry.

From time to time, clus­ter orga­ni­sa­tions, edu­ca­tio­nal ins­ti­tu­tions, and others invite com­pa­nies to connec­ting events such as hacka­thons. Here, par­ti­ci­pants are orga­ni­sed into small groups, who work inten­se­ly on sol­ving spe­ci­fic, pre-defi­ned chal­lenges of actors on the cus­to­mer side within a short time frame. Howe­ver, in the case of emer­ging tech­no­lo­gies, such as drones or quan­tum com­pu­ting, it may not neces­sa­ri­ly be evident what these inno­va­tive solu­tions can be used for in spe­ci­fic sec­tors or firms. There is a need for an inno­va­tive approach to clo­se­ly connec­ting start-ups and poten­tial customers. 

The shark tank is a well-known concept that capi­tal firms use to dis­co­ver start-ups to invest in. It is now also wide­ly known thanks to popu­lar TV-shows under the same name in the USA, BBC’s “Dragon’s Den” in the UK, “Dans l’œil du dra­gon” in France, and Denmark’s “Løvens hule” (The Lion’s Cave). In short, this for­mat pro­vides start-ups with a few minutes to pitch a busi­ness idea, fol­lo­wed by a Q&A ses­sion where poten­tial inves­tors chal­lenge the start-up and decide if they are inter­es­ted enough to nego­tiate an invest­ment with the start-up owners.

Our new concept of a “Reverse Shark Tank” (RST) is a way of esta­bli­shing mea­ning­ful connec­tions bet­ween start-ups and poten­tial cus­to­mers through encou­ra­ging and enabling co-crea­tion of inno­va­tion solu­tions. It is done in reverse order as the poten­tial inves­tor – typi­cal­ly in the form of a large incumbent firm – first pre­sents chal­lenges that it has iden­ti­fied per­tai­ning to a part of its busi­ness or sup­ply chain. Thus, the “shark” is now pit­ching to a range of start-ups that the­reaf­ter present their tech­no­lo­gies and how these may help solve the pre­sen­ted chal­lenges. As such, the RST revolves around tech­no­lo­gi­cal solu­tions to real chal­lenges faced by indus­trials. Such a ses­sion for mat­ching cus­to­mers’ chal­lenges with start-ups’ offe­rings can lead to sub­sequent mee­tings and co-crea­tion of solutions. 

We tes­ted the RST concept in both Den­mark and Cana­da with a series of start-ups in the drone indus­try by intro­du­cing them to seve­ral, more esta­bli­shed, firms. Drones are being consi­de­red an emer­ging tech­no­lo­gy, and the cur­rent EU focus on the tech­no­lo­gy is esti­ma­ted to lead to 150,000 jobs and an annual reve­nue of €15bn by 2050¹. Howe­ver, des­pite the huge poten­tial for mar­ket oppor­tu­ni­ties, the indus­try is pri­ma­ri­ly com­po­sed of start-ups strug­gling to esta­blish them­selves in the mar­ket­place. Using RST, we asked large com­pa­nies to pitch chal­lenges to the start-ups by pre­sen­ting pro­blems that they thought could be addres­sed using drone-based tech­no­lo­gy. Whil­st the RST ins­ti­ga­ted an ini­tial dia­logue, it also pushed the par­ti­ci­pants towards a clo­ser dis­cus­sion that would hope­ful­ly lead to a fruit­ful inno­va­tion partnership. 

As an inno­va­tion model, in prac­tise reverse shark tanks take the form of events where large com­pa­nies invite small com­pa­nies and start-ups to come to their sites. We tes­ted seve­ral for­mats to ana­lyse the most effec­tive. Our first event was held at Maersk – the lar­gest ship­ping com­pa­ny in the world. Although the com­pa­ny was not yet rea­dy to invest, a num­ber of poten­tial sys­te­mic uses for drones rele­vant to the com­pa­ny appea­red, which had not pre­vious­ly been envi­sa­ged. Thus, Maersk obtai­ned valuable ins­pi­ra­tion for future busi­ness oppor­tu­ni­ties and were convin­ced that these would be on small and on an ad hoc basis. In Den­mark, we also car­ried out an RST with Sund & Baelt, who run the two lar­gest bridges in Den­mark, where drone solu­tions were sug­ges­ted for very detai­led ins­pec­tion assess­ment of main­te­nance needs on the infra­struc­ture like sear­ching for cracks in the concrete. This led to agree­ments of fur­ther col­la­bo­ra­tion bet­ween the com­pa­ny and a couple of the drone tech­no­lo­gy start-ups present at the event. 

Final­ly, others like the Danish ship­ping com­pa­ny, DFDS, col­la­bo­ra­ted with drone start-up Upte­ko to create viable solu­tions to stra­te­gic pro­blems such as risk mana­ge­ment. They were able to deve­lop drone tech­no­lo­gy to deal with emer­gen­cies such as “man over­board”. For this, the drones use infra­red came­ras and GPS to search the sur­roun­ding area for people who may be in the water. The basis for this now well-esta­bli­shed part­ner­ship was one of the first reverse shark tank events. 

The bene­fits of Reverse Shark Tanks 

Seen from a mar­ket crea­tion pers­pec­tive, the RST for­mat may enable more expe­dient and lean deve­lop­ment of tech­no­lo­gy-based solu­tions to open nascent mar­kets. Such media­ting arran­ge­ments can close the gap bet­ween start-ups and poten­tial cus­to­mers that exist when both par­ties face dif­fi­cul­ties iden­ti­fying each other. Thus, the RST for­mat is an advan­tage to both types of actors, recent­ly demons­tra­ted through a range of suc­cess­ful RSTs with drone tech­no­lo­gy start-ups and poten­tial public and pri­vate cus­to­mers in Denmark. 

There were even cases where seve­ral of the start-ups for­med new part­ner­ships among them to bet­ter address the needs of poten­tial cus­to­mers even better.

At these RSTs, start-ups gai­ned 1:1 access to poten­tial cus­to­mers, which hel­ped them qua­li­fy and fur­ther deve­lop their offe­rings as well as streng­then their inno­va­tive com­pe­tences towards sca­ling-up their busi­ness. For the start-ups, they gene­ral­ly used the “open door” to present their solu­tions and get­ting the much-nee­ded feed­back from poten­tial future cus­to­mers. The start-ups got inva­luable insights into what mar­ket needs they should deve­lop for. They also expres­sed the inva­luable insights they gai­ned from lis­te­ning to the conver­sa­tions of other start-ups and how they pit­ched their solu­tions. There were even cases where seve­ral of the start-ups for­med new part­ner­ships among them to bet­ter address the needs of poten­tial cus­to­mers even bet­ter. Hence, they broa­de­ned their mind­set from their own solu­tion to seeing how best to match needs of poten­tial cus­to­mers through part­ne­ring with com­ple­men­ta­ry solu­tions. The expe­rien­ced bene­fits for the large firms were main­ly in cla­ri­fying the poten­tial use cases and how to reduce poten­tial bar­riers to use. Moreo­ver, the poten­tial cus­to­mers gai­ned an over­view of busi­ness-rele­vant oppor­tu­ni­ties in a jungle of inno­va­tive offe­rings and got the oppor­tu­ni­ty to influence the deve­lop­ment of solu­tions to fit their needs. 

The concept has wor­ked very well for drone-orien­ted com­pa­nies and so moving for­ward its suc­cess in other indus­tries will be explo­red. Thus far, robo­tics com­pa­nies and quan­tum tech­no­lo­gy net­works have shown inter­est in tes­ting the inno­va­tive concept.