A lot has changed in the past year, including the way enterprises identify and develop new technologies. Besides relying on virtual meetings with innovators, CIOs (Chief Innovation Officers) are now turning to new strategies, and one of them is reverse pitching.
It’s not a new idea, but its value is coming to the fore as COVID 19 places limitations on how prospects are found and nurtured. Sure, you can now attend a trade show on Zoom instead of walking the floor for hours, but using reverse pitching can save you even more proverbial shoe leather.
Turning Entrepreneurship Around Using Reverse Pitching
Let’s say you’re an insurance company that wants to reduce costs, enable better service, and stand out in the market. That’s a pretty vague wish list, and the number of companies that could potentially provide what you want is massive. It’s a problem even knowing where to start if you’re looking for something that you can’t really define as a product yet.
In reverse pitching, a buyer looks for a seller by explaining what they need to a forum of service providers, and the service providers determine if they fit the bill. Reverse pitching is directed at startups that know what they can deliver and are looking for companies or corporations looking to receive their specific service.
Lack of funding to scale up, or being just out of stealth mode makes it really hard for startups to meet potential partners at events. Reverse pitching events give them an opportunity to match their product or service with an established firm without going door to door.
In the case of the fictional insurance company, a reverse pitch event might result in a connection between them and a fantastic app that can be used to find medical service for travelers who become ill, which saves money for the insurer and frustration for the traveler. What an amazing idea!
Advantages for Corporations, VCs, and FinTech
Reverse pitching events tend to fall into three categories, depending on the buyer: enterprises, venture capital firms, and financial institutions. If you’re looking for a show, chances are that it’s being hosted by a single organization from one of these groups, or possibly a small consortium of them (no need to let too many in on the secret). Local chambers of commerce, business schools, and promotional firms also run them.
For enterprises, reverse pitching provides access to ideas and technologies that they might not have the resources or entrepreneurial abilities to develop on their own. The situation is a bit like speed dating. They have a general idea of what they are looking for but won’t know it until they see it. In fact, reverse pitching events tend to be fast paced as both sides of the table want to find the best match.
The pitch focuses on key development needs, while some events feature innovation challenges that allow candidates a number of weeks to respond. Once a match is made, the enterprise supports their technology partners with capital and a ready-made customer or simply partner with them running a pilot first.
Venture capital firms tend to get a lot of business plans from startups that are at the wrong stage or don’t match the VC’s fields of interest. With a reverse pitch, venture capital firms can introduce their funding capabilities to the right kind of entrepreneurs and find startups that fit with the subject matter experts working at the VC.
The financial technology industry is highly competitive. By reverse pitching to startups, banks and other financial institutions can find innovations that are beyond the ability of conservative, large organizations (as these firms tend to be) at a much faster rate than usual. With a unique technology, banks can differentiate their offering and increase convenience for their clients.
Your New Favorite?
Internal development, high value mergers and acquisitions, and venture capital often require extensive investment before results are seen, if at all. Each of these funding models tend to involve extensive risk, and in the case of VC, lots of shopping.
Reverse pitching can substantially reduce risk and expense. Many innovation challenges, for example, involve “prizes” of approximately $50,000 for short term development costs once a startup contends that it can deliver a solution. This is as opposed to $100,000 + that an angel investment might go for.
Startups at any stage can be included in a reverse pitch event, so if a technology only requires a few tweaks to suit an enterprise, then time to market is optimized. Lastly, startups that apply to reverse pitching events are more likely to understand that the enterprise will acquire the technology relatively quickly, so arguments over long term valuations, dilution, and ownership can be minimized.
Sourcing Creativity from the Comfort of Home
Once upon a time, if you went into a bank wearing a mask, you’d get arrested. Now you get charged if you don’t wear a mask. The coronavirus has turned many things 180 degrees, but not every development has been negative. In the world of reverse pitching, there are hundreds of brilliant ideas just waiting to be discovered, and nowadays, you don’t even need to leave home to hit the jackpot.
As Published on Air Doctor.
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