The Reverse Pitch: The Cart Before the Horse

Reverse Pitch

It’s a story older than the internet itself: A tech startup is born from a (sometimes) brilliant idea, and the founders go off in in search of funding to make the dream a reality. Some get funded and some don’t, and of those that do, some succeed and some fail. It’s perhaps not a bad model, and one from which many now-iconic brand names have grown.

The trouble with the traditional VC model is that it sometimes assumes market demand for what appears to be a great idea. Far too often, though, even the most skilled entrepreneurs wind up addressing the wrong problem. What looks really cool in a slide deck is greeted by a collective shrug in the marketplace, and that’s the end of that.

What if the process worked in the opposite direction, where products and services were created to fill a specific, existing need? This is the essence of the reverse pitch.

The Reverse Pitch

A reverse pitch generally goes something like this: An investor group, or a multinational corporation (MNC) or financial institution, will invite a number of startups to a session where they’ll explain a problem that requires a tech solution. The startups are then sent off to innovate in search of an answer. In the case of MNCs and financial institutions, the pitch might be for filling a very specific niche, while investors might pitch an entire business plan.

On the face of it, the reverse pitch turns the typical funding proposition on its head. Instead of an idea in search of capital, there’s ample capital in search of the right idea. Ideally the reverse pitch becomes a win-win, where the investors or MNC receive the benefit of tech expertise from a wide range of sources and not just the talent they have in-house. Financial institutions especially may find that the model helps keep them competitive in the rapidly-changing fintech environment.

From the startup side of the equation, the reward is less guesswork and the knowledge that the company’s time and resources will be spent working on solutions with real-world demand, and with financing ready to go. Companies including Aflac, Phillips and Bayer have participated in reverse pitch events, creating opportunities for startups to fill needs for some very large organizations.

As an aside, it should be noted that there’s an alternate definition of the term “reverse pitch” in which the founders of a startup have their own company pitched back to them by a third party, the goal being to give them a fresh perspective on their own business. For our purposes, we’ll address only the investor/MNC/startup model.

What Can Go Wrong with Reverse Pitches?

For all the logic behind the concept, reverse pitches aren’t always a slam dunk. The startup generally is participating in a sort of cattle call with many others, so there’s no guarantee that any given solution will be the winner. Of course there are no guarantees in the traditional pitch model, either.

And even after a winning idea is chosen, the story isn’t over for either the investor or the startup. The solution must be tested in practice to make sure it actually meets the need. This is another juncture where, just as in the traditional pitch model, the investor or MNC needs to resist the “shiny new toy” factor and make sure the product or service offers real utility.

With those caveats, though, it’s easy to understand the appeal of the reverse pitch from both sides of the equation. Investors and companies get outsourced innovation to fill very specific needs, and startups know that funding awaits the right solution.