The Creative Destruction Lab (CDL) – Wisconsin provides mentorship to scalable, seed-stage science and technology-based companies in the risk and insurance space. The program allows these companies to gain mentorship from entrepreneurs and angel investors, advice on technology roadmaps from CDL’s Chief Scientists, and business development support from top MBA students. Everyone, from the venture founders, to the mentors, and to MBA students can win through the process. CDL offers the founders of early-stage companies invaluable advice and support. MBA students get an opportunity to learn more about the early-stage company space, how to value such companies, and the pain points these companies face. Mentors, in turn, receive an opportunity to meet other entrepreneurs and investors, provide advice, and possibly invest in these companies.
I was able to sit in on much of the daylong, intensive process, and learned about some of the many problems the founders face. Common themes throughout the day were: how much capital to raise, how to communicate their valuation to investors, when to exit, and the difficulty in hiring top talent to help scale their businesses. I found it interesting to hear the mentors advise the founders not to focus on their revenues for valuation in their communications with prospective investors. Instead, they recommended that founders focus on the vision for the future of their companies. Early, rapidly growing companies using current revenues for valuation could result in an undervaluation. I was further surprised to learn of the difficulty these companies face in attracting talent; one mentor even suggested hiring a headhunting firm, potentially costing 100k, to help them in hiring a new CTO. Hearing the pain points, as well as the huge opportunities of these companies, is a fascinating and unique experience for UW-Madison MBA students.