CDL Estonia helps to scale science- and technology-based startups
Creative Destruction Lab (CDL) is a non-profit organization that delivers an objectives-based program for massively scalable, seed-stage, science- and technology-based companies. In 2022, CDL-Estonia was launched at the University of Tartu, offering a Digital Society stream for early-stage founders working on technologies with a society-level impact in an area of increased public sector funding. These include but are not limited to digital health, cyber security, e-governance, energy, smart cities, defence, and other sectors. We talked to Ermo Tikk, Director of CDL-Estonia, about the effects of the program on participating startups and the wider startup community.
Could you briefly tell us about Creative Destruction Lab (CDL)?
Creative Destruction Lab is a global mentor program for seed-stage science- and technology-based startups that have already achieved certain market validation and are looking to scale and unlock new market opportunities.
It is a global network currently operating in 12 locations: five in Canada, three in the U.S. and four in Europe. The European sites are at Oxford, Paris, Berlin, and since 2022, Tartu, Estonia. Each location focuses on different focus areas or streams – altogether, 20 of them.
How did Tartu become the 12th location of the program?
The story starts a few years ago when the Estonian entrepreneurs Sten Tamkivi and Taavet Hinrikus were mentoring teams at CDL-Oxford’s Fin-Tech stream. They saw the program’s impact and how it could benefit the Estonian startup ecosystem. They were later joined by the American entrepreneur Andrew Thompson, who has family links with Estonia and supports initiatives related to strengthening Estonia’s economic ties with the West and hence our independence. They have been instrumental in bringing the program to Estonia and securing our runway for the first years through Sten+Taavet, Kistler-Ritso Foundation and The Ministry of Economic Affairs and Communications.
But why Tartu? All CDL locations are linked to high-level universities – usually business schools – that serve as springboards for innovation. For instance, the University of Oxford’s Saïd Business School or the Rotman School of Management at the University of Toronto. In Estonia, the University of Tartu was deemed a good fit for the program.
The launch of CDL-Estonia at sTARTUp Day 2022.
Which startups should consider joining the CDL-Estonia program?
Our target group is startups working on solutions for a digital society. First, all kinds of technologies can be applied for the advancement of digital society: predictive analytics, connected devices, IoT, robotics, machine vision, digital and hardware infrastructure, and enterprise software. In short, technologies that allow our society to become more digital or are related to data, data analytics or how to optimize everyday life for citizens.
Secondly, a considerable focus for us is on digital health: particularly in the fields of diagnostics, medical data and data analytics, health databases, bioinformatics, genetics, digital pharmacy, patient engagement, etc.
And thirdly, cyber security, which includes encryption, security automatization, digital trust verification, anti-fraud solutions, also post-quantum cryptography and some block-chain related solutions. Basically, all kinds of digital solutions that allow data to be stored and exchanged securely.
Geographically, our primary focus is on the Baltic and Nordic region, then on Eastern and Central Europe and North America.
What does participating in the program look like for a startup?
First, CDL is a non-profit organization, so the program is completely free-of-charge, and we take no equity.
The application process for the CDL program starts in April and closes at the end of July. Filling in the application takes about 45 minutes, and interviews and the final selection of teams happen in mid-September. We expect several hundred applications from which we can accept up to 24 teams to the CDL-Estonia program.
We have five mentoring sessions with the participating teams from October to June.
Every eight weeks, we hold an intensive one-day session where startups and mentors collaborate in different formats to sharpen their objectives and prioritize time and resources. The program ends with a super session for all participating startups in Toronto.
Can you describe in more detail what happens during the sessions?
Each session starts with small group meetings between the startup and 2-5 mentors, lasting about 20-35 minutes. The startups have 3-4 such meetings over 1.5-2 hours, where they can discuss topics relevant to them with mentors.
In advance of the meetings, our team has prepared venture documents with all relevant information: what is going well for the team, what is not, their goals for the next period, financial state, etc. This ensures the startups come fully prepared for the meetings and mentors have all the relevant information to dive into the discussion. The idea is for startups to identify three key objectives for the next eight weeks.
The small group meetings are followed by large group meetings, led by our moderators, where mentors discuss the challenges of each startup. This provides a broader context and additional ideas for the startups, which they can use for defining goals and action plans.
Finally, the mentors gather for a closed deliberation of the teams' progress, after which they vote on which teams are invited back to the next session.
What could be the reasons if a team is not invited back?
The reasons can be different, both positive and negative. For instance, if there are founders who are not coachable or open to feedback. As all our mentors contribute their time on a voluntary basis, it makes sense to work with the teams who actually seek their help. Or it could also be that the startup is doing very well, and mentors feel they have provided all the guidance they can to the particular startup.
In all cases, we seek the best mentor-startup match, where mentors can provide the most value to help the startup with their challenges.
When mentors vote for a team to continue, they are also committing a certain amount of their time to help the team between the sessions.
Seven of the 18 teams that started at CDL-Estonia last fall graduated. Two dropped out themselves, and the mentors voted out the rest.
What sets CDL apart from other similar programs?
CDL is a non-profit organization, so the program has no fees and takes no equity. Our goal is to match startups with a lack of certain experience and experienced mentors who have built successful companies.
The second notable difference is that CDL is very personalized. Instead of serving a "one size fits all" program of content to our startups, we let them tell us what they need – and then connect them with relevant mentors capable of helping with those very specific challenges.
You could compare it to a closed club where all the mentors contribute their time and know-how on a voluntary basis because they want to contribute to the success of startups that have undergone a strict selection procedure.
However, as many of the mentors are also investors, they may end up investing in some of the companies. For instance, this happened to one of the teams in our first batch.
How does CDL-Estonia impact the local startup ecosystem more broadly?
It is a practice of CDL to always run a university course for students. We already tested it in Tartu, giving students the opportunity to attend the sessions, be part of the teams’ journey and learn how mentors think. Some locations in the CDL network also run funds where students can participate in funding decisions in spinoff companies.
In addition, we have a program for high school girls who can shadow our mentors and ask them questions during the sessions. This was extremely popular with our mentors and will hopefully contribute to our goal of having more female founders in the future.
If we look at the ecosystem as a whole, we have incubation programs for the ideation stage and accelerator programs helping startups land their first customers and investors. CDL-Estonia fills the gap in the stage after that, where there are currently few support initiatives. We have the expertise to guide the teams in that stage, particularly those working on science-based, advanced technologies.
Finally, how does being the home of CDL-Estonia impact Tartu?
Thanks to CDL-Estonia, we will have people visiting Tartu who might not come here otherwise. Out of the four sessions, we currently hold two in Tartu – one is virtual, and one is held in Tallinn. One of the sessions takes place right before the sTARTUp Day festival, which is an excellent opportunity to get to know the Estonian startup ecosystem.
We can also introduce our region to international investors. For instance, many U.S. and Canadian funds are interested in seeing what is happening in Estonia. So we can introduce our region to international investors. So combined with the above described, there are a lot of different effects and impacts.