In early November, the Creative Destruction Lab (CDL), in conjunction with UW-Madison, welcomed 36 early-stage risk-related startups to campus to facilitate a day’s worth of mentorship from insurance, technology, and risk leaders from around the globe. A separate day’s activities focused on health and wellness-related startups. As always, these sessions proved to be incredibly valuable for all in attendance: students, mentors, founders (people who develop startups), and staff alike.
As the first of four sessions to occur in the nine-month cohort, part of the day was spent familiarizing ourselves with new faces, while the rest of the day focused on making strides in innovation that will impact the insurance, risk management, and health and wellness fields in the coming years. As a result, some emerging trends surfaced among these companies.
Artificial intelligence model improvements are drawing more competition.
There is massive investment going into foundation models right now (think ChatGPT, Llama, etc.). With this, the models’ accuracy, marginal cost, and applicability are improving as well. While this is positive for end consumers in that the insurance distribution process is improving, it is creating a crowded landscape for founders. The best thing to do as founders is to find an ideal customer profile and go after them hard. See the next point for more.
Find a product-market fit and dominate it, then expand.
As early-stage startups are vying for a piece of what seems to be a shrinking pie of venture capital (investment for startup) dollars, it is imperative to show success among a venture’s (startup’s) key customer base. A recurring theme we heard in CDL’s first session was the importance of discovering who needs the product the most and who is willing to pay for it. Showing this to investors will be key in raising startup investments in what is a competitive funding market.
Existing but innovative insurance models are ready to disrupt new areas of the market.
The insurance market is ready to take on proven models in new parts of the market. For example, one venture has built a telematic platform for ship owners, relaying information to operators and underwriters to allow engineers to get ahead of non-scheduled maintenance that will decrease the overall loss profile of a given vessel. Another startup’s parametric models are being deployed into business income/interruption insurance policies to cover losses in short-term utilities’ lapses that commonly are uncovered in traditional policies.
It will be an exciting year with this group of ventures and mentors. Looking forward to seeing what else will happen!