ABC, a digital startup from Estonia, was selected as the preferred supplier in a procurement contest for delivering a customer relationship management (CRM) system. The entire team was thrilled about this opportunity as it was the first time they had secured interest from a major customer, but suddenly they found themselves ejected from the process. Eager to understand what had gone wrong, they learnt that when the customer had approached an industry analyst firm for more information about them that an analyst reported back that they had “a list of some 500 vendors of CRM, many of which he meets regularly to track the development of their products, but [ABC] is not on the list”. To cap it off, the analyst suggested that if they bought from an “unknown venture”, they would be “taking a risk”, which led one customer employee to ask, “who would sign up to a company that no one has heard of?”

Digital startups rely on evaluator endorsement

The above example reflects a pressing problem – as an unknown quantity, new ventures rely on influential evaluators like industry analysts to endorse them. Industry analysts are important because they talk directly to technology adopters – their clients – about the strengths and weaknesses of ventures. Moreover, they cover ventures in rankings, research publications and procurement lists, all of which raises their profile with technology buyers, investors, and the media. Failing to garner their attention can mean the industry analyst may caution against a venture, depriving it of the resources and support it needs to prosper.

Pitching to industry analysts

Ventures build and maintain industry analyst interest through ‘a pitch’. However, pitching to industry analysts is not easy. There is nowhere near the same levels of guidance one finds around, for instance, the investor pitch. Our study, The Valorising Pitch: How Digital Start-ups Leverage Intermediary Coverage, published in the Journal of Management Studies, found that these pitches were marked by several hurdles that included:

Building relationships with industry analysts: These pitches are not a one-off event but a process where ventures need to pitch continuously (e.g., every quarter). Ventures must initially engage the analysts and keep them interested over many years.

Understanding industry analyst expectations: Gaining industry analyst attention requires assembling more than one set of skills: it is not just a matter of pitching but also understanding what industry analysts are looking for. Ventures need to work hard to construct their stories and pitch deck to make themselves attractive to the analyst. The process is unlike the investor pitch as the industry analyst is a different audience, meaning ventures need to switch from an investor tone to an analyst focused one.

Navigating industry analyst categories: Pitching requires periods of socialisation whereby new ventures must learn about these evaluators and the specific ‘categories’ they use to frame the technology market. Analysts impose categories on technology markets that ventures must consider and perhaps even adapt to if they are to avoid illegitimacy discounts. 

Why do we call it a valorising pitch?

Our study found that making it onto a ranking or procurement list was only part of what could be gained from these pitches. The industry analyst might also talk up the venture with clients and others, advocate for it during client meetings, and give spontaneous feedback to help it foreground its more innovative attributes, which raises the question of why the industry analyst could support or promote a venture, especially considering its role as an ‘impartial’ evaluator. As we see it, the intermediary promoted ventures not in a prescribed or designed way but as a consequence of its evaluation process. This interpretation is reinforced by the French sociologist Francois Vatin (2013), who, in tracing the etymology of the concept ‘value’, distinguishes between ‘evaluating’ and the more generative notion of ‘valorising’ where the latter conception captures how the work of evaluation is not merely about appraisal but can also be additive towards the phenomenon under review.

A new type of pitch?

Scholars have identified six different pitch types to date (Fisher et al., 2021). Still, none directly reflect the dynamics and audience identified here – of the valorising pitch – which we define as a device used by a digital startup to enrol an evaluator to help build market presence. Our paper highlights how ventures could engage the evaluator to overcome some of the damaging aspects of being an unknown quantity. Valorisation appeared as powerful as other influences that stem from the formal evaluation system, and ventures that proactively leverage this valorisation appear more likely to engage potential customers and other resource providers.

References

Fisher, G., Neubert, E. and Burnell, D. (2021). ‘Resourcefulness narratives: Transforming actions into stories to mobilise support’. Journal of Business Venturing, 36, 106122.

Vatin, F. (2013). ‘Valuation as evaluating and valorising’. Valuation Studies, 1, 31–50.