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.