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.

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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.