Staff Services Student Enterprise

The Second Pitch

23 Aug 2021

Ever since the publication of the review of Scotland’s technology ecosystem by Mark Logan, founder of Skyscanner, a year ago, the term ‘innovation ecosystem’ has become somewhat de rigeur.

Thanks to television shows such as Dragons Den and Shark Tank, when we think of a ‘business pitch’ we simultaneously think of terrifying humiliation and success beyond our wildest dreams.

Neil Pollock, Professor of Innovation and Social Informatics, believes that as a result, while entrepreneurs focus on navigating that particular minefield, the second pitch seems to be an extremely distant and almost unimportant milestone.

However, it is this, second pitch that could very well make the real difference between triumph and disaster for emerging companies.

Because it is the second pitch that is primarily about the processes of 'scaling-up' and ‘credentialing’.

This is why our study will directly observe how digital enterprises prepare for and give pitches. This will therefore provide the first ‘naturalised’ study of this kind of pitch (again most existing research on investment pitches tends to be based on reality TV). We are also conducting semi-structured interviews to understand both:

  • the processes assessors use to make sense of the pitches and assess the start-ups
  • how they may then go on to recommend or publicise these ventures to others

To analyse these pitches we draw on the emerging specialism of ‘Valuation Studies’ (which is the application to market situations of analytical techniques borrowed from Science and Technology Studies, Sociology of Finance, and Economic Sociology). We will extend this current work by conceptualising these pitches as part of an ‘endorsement economy’. This idea captures not only that market actors provide assurances about the viability or value of a venture, but how/whether they play a key role in helping to realise that value through ‘championing’ a venture.

The suggestion is that new companies endorsed by important market actors receive a significant boost and, by the same logic, the lack of that particular seal of approval becomes a block or impediment to progress. We term this hurdle the ‘second most important pitch’.

It’s obvious that pitching to analysts is a crucial step in the early life of a digital venture, particularly when they attempt to scale. It is the critical practice in fiercely competitive technology markets where attention gets funnelled to some enterprises and away from others. Whether or not a venture will grow can depend upon how well it overcomes this hurdle. The UK, for instance, is recognised as among the most vibrant places in the world for the creation of digital start-ups. However, its new enterprises are often unable to take the next important step.

According to Nesta “too many start-ups start, but never scale”. Analyst pitches are key to these processes of scaling, but little is known about them. The Scaleup Institute highlights six factors that hinder the development process of ventures, but there is no mention of this second pitch. Since industry analyst outputs are widely read by technology adopters and investors, those pitching to these actors receive not only increased attention but essential forms of ‘credentialing’.

It is only in recent years that industry analysts have systematically turned their attention to start-ups. Typically, they paid attention only to larger vendors. However, with the accelerating pace of digital innovation, given added impetus by the appearance of lightweight technologies such as ‘apps’, important technological developments now come to prominence quickly and outside the large vendor labs. For instance, the leading analyst firm Gartner has a category for potentially transformative start-ups labelled Cool Vendors and those designated as such are said to benefit from increased ‘visibility’, ‘sales enquiries’, and ‘investment’. HfS and Aragon Research have similar ‘hot vendor’ designations’.

Another important new development is the proliferation of specialist analyst services sold to equity investors (the IDC Private Vendor Watch Service, the 451 KnowledgeBase, Ovum’s Investment Tracker).

So, as the barriers to digital innovation continue to come down, we expect further changes to the evaluative infrastructures underpinning the start-up community, where the enterprises connecting with analysts are boosted and those failing to do so are put at a disadvantage.

At the University of Edinburgh, we are at the forefront of understanding this shifting landscape and that expertise can help organisations adapt and improve; to future proof.

Discover more about our Future Proof campaign and how our expertise can help your organisation. You can also sign up to our newsletter to hear about news and developments.