Amar Sawhney has built up an impressive record of startup exits. He’s created billion-dollar companies, sold some, and has taken others public. Now he’s heading up three startups at once attracting funding from top-tier investors like Catalyst Health Ventures, Ascension Ventures, Delos Capital, and Sparta Group.
In this episode, you will learn:
- Timing the sale of your business
- Picking the right bankers to help you go public or sell your company
- Operating public companies
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Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
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About Amar Sawhney:
Amarpreet (Amar) Sawhney, Ph.D., is the Founder, Chief Executive Officer, and Chairman of the Board of Directors of Instylla. He is also the CEO of Pramand LLC, and Rejoni, Inc.
Prior to this, Dr. Sawhney served as CEO and Chairman of Augmenix (acquired by Boston Scientific) and Ocular Therapeutix (NASDAQ: OCUL). In addition, he is a general partner of Incept, LLC, an intellectual property holding company.
Previously, Dr. Sawhney founded Confluent Surgical and served as its President and CEO prior to its acquisition by Covidien plc. He also was a technology founder of Focal, Inc., a biopharmaceutical company acquired by Genzyme Corporation, and a founder of AccessClosure, Inc., acquired by Cardinal Health.
Dr. Sawhney’s innovations are the subject of over 120 issued and pending patents. He holds M.S. and Ph.D. degrees in chemical engineering from the University of Texas at Austin, as well as a B.Tech. in chemical engineering from the Indian Institute of Technology, Delhi, India.
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Read the Full Transcription of the Interview:
Alejandro Cremades: Already hello everyone and welcome to the deal maker show. So today. We have ah a really amazing you know founder I mean I I got to tell you that they I was getting Diy from. You know, taking a look at all the different com that he’s done all the exits. You know, many many many good positive outcomes. And there’s goingnna be like really a lot of interesting topics. You know that we’re gonna be covering today around you know, building scaling financing and also exiting you know how to think about timing when it comes to exiting dom so without further ado. Let’s welcome. Our guest today. Amar Sawhney Soi welcome to the show hi.
Amar Sawhney: Thank you I Honor good to meet you Glad to be here.
Alejandro Cremades: So so originally originally born in India Amar so give us a walkthrough memory lane. How was life growing up there.
Amar Sawhney: Ah, it was so quite nice meaning my father was in the indian air force. So we got to move every 2 years so we lived in various parts of the country I got exposure to the eastern part of the country in shilong. Ah, where we had a wonderful house on the hills a pretty large British Mansion type of a place and then we moved to the center part of India different state different languages and then we moved to the western side of India. Where we ended up settling down. He took retirement and I finished my high school out in Ghani Negar which is the capital of gujarath now and I finished my high school over there. So after I did that then we I went to study engineering chemical engineering specifically. At the Indian Institute of technology in Delhi so eighty seven eighty three to 87 I was there. It was a great time. We had all kinds of it was one of the best engineering schools in the country. So. Lot of good exposure and a great platform to kind of launch your career I finished that and then I had a few opportunities to kind of go do an Mba I had an admission to all the Mba schools go to Mba schools in India and I had a job which is a really good job.
Amar Sawhney: And then I had an admission and a scholarship to the University Of Texas at Austin and the United States so figuring that I could always do those other 2 things. Ah some point in the future I thought I would go explore the us so in 1987 I came to the us to do my.
Alejandro Cremades: Now you did your master’s work. You know I’m sure that coming here to the Us you know, seeing the culture and the novation happening I’m sure that that was exciting for you but it sounds like the visa stuff you know the paperwork was a little painful to be able to really.
Amar Sawhney: Master’s work.
Alejandro Cremades: Clear on what that courier path would be so how would you say because as they say in life. You know one door closes and another one opens how was that transition you know from getting a door closed to getting another one open for you.
Amar Sawhney: Yeah, so the ecosystem was at that time in 1989 when I finished my masters not as well developed especially in the field of materials and and chemical engineering type of a thing. So. Ah, tech was also just taking off people didn’t really have a concept especially companies like Exxon Chevron dao chemical these were the big recruiting firms that came on. They didn’t have any concept of hiring ah people who did not have authorization to work in the United States so when I applied to almost thirty different jobs and I was yeah used to getting everything that I applied for me I thought I was god’s gift to mankind back in India so it was very disillusioning to find you know people would not even give you an interview because you you didn’t check the right box of having the work authorization. So. Quite demotivating and and I consider kind of going back to India where I might have obviously people valued me more highly but I’m not 1 to sort of retreat so in that process I sought the advice of my advisor who I was doing research for Dr Jeffrey Hubble and he said look I have some interesting research projects if you would consider doing a Phd then maybe you do that. So I took his advice and continued on and that was actually one of the best you know forks in the road that one could take because.
Amar Sawhney: He while being young was very promising in his career and we came up with some really cool interesting technology where we could do chemical reactions on living tissue without even harming the first cell using light-pa polymerizations right now which I being used for 3 d printing etc. We were doing this thirty five years ago and we came up with this really cool technology and that became the basis for a couple of companies and venture capital groups approached us they wanted to license that technology and that gave me my first break and my first job and I moved to the Boston area.
Alejandro Cremades: So I was quite the right because that thing that was focal and basically there with focal. You guys ended up taking the company public and you were 27 years old doing the whole roadshow you know for the ipo. So how was that for you too I’m sure that that was pretty wild.
Amar Sawhney: Now that was a heady experience. You know, riding limos and wall street and going to Europe and we went to uk italy different countries and stuff like that and you know as a kid because I was the guy who really understood the technology. I got to go everywhere and meet all these investors I was in Sears Towers I was in you know all these really fancy wall street places and things so it was great exposure for somebody who had you know, really not encountered the financial world before. I was a technical guy to be able to kind of get this exposure was amazing. Absolutely you know who gets that opportunity.
Alejandro Cremades: So obviously for you there you know one thing you know let to the next and obviously you guys took the the company public but at 1 point you start to reflect on what could be next for you because I mean reaching those heights you know at 27 you know 27 you’re full of energy. You know, full of vision full of. Everything so what was that thinking you know that thought process that got you to think that maybe there was another chapter that you could explore and.
Amar Sawhney: Yeah, so there was an area that we had initially worked on at focal which that trial was not successful and the company had moved on to developing a seedent for lung surgery but that initial application for gnecological surgery. Something that I felt I could still solve but my equity position at that point in time at focal was very very small and like a decimal place and it’s not all about equity because I thought focal taught me a lot I got a great opportunity. I discharge my duty by taking getting the products their first products through the Fda approval through european approval helping with the roadshow taking the company public etc. But then after a while I said look I do want to do more things. But. Given my small equity position over here. This is probably not the right platform I tried to get them to license some of the technology they wouldn’t work on which was my technology but I couldn’t get it out from them. So this gave me got me frustrated I felt that. This was not a right thing. This technology would not be worked on in the future and they still don’t want to give it to me I wanted to give them 20% of my new company to in exchange for that which I thought was a pretty fair deal. But then yeah you yeah I started turning negative but they weren’t responding.
Amar Sawhney: And I thought I’m not a negative person. It is not in me to every day come into work feeling unhappy I said if I feel confident in my abilities then I should just go do it so I told them that I’m going to leave and I’m going to go do something else and if they don’t mind. Please let me go so they said okay, well just don’t. Ah, compete with us for some time and you can go and I sat down went back to my basement came up with new technology new patents were filed I had a little bit of money saved away from the ipo from focal. So I use some of that capital. Went to friends and family begging for $10,000 at a time type of a thing and we put the capital together and started our first first company called confluent surgical and this time I took this intellectual property. And instead of putting it all into one operating company. We put it into a holding company called incept which I founded with my partner Fred Kushravi who’s on the west coast and we the 2 of us kind of contributed our intellectual property and put it in this holding company and then field specifically licensed it to confluent. As the first operating company in brain and spine surgery and there we created sealans for brain and spine surgery.
Alejandro Cremades: And 1 thing here that is very interesting that typically is not what our listeners are used to you know rather than just like going all out you know into one single company in this case like you were saying you had the ip and the technology and everything on insect. And basically you were like spanning out that technology you’re liceing that licensing that technology to other companies that you’ve been rolling out so how is that thought process of structuring things like that and why it was important. You know as part of your guest’s journey. Yeah.
Amar Sawhney: So that is important and particularly important for companies and technologies that take a while before they can start generating revenue. So unlike a service company. So if you have a service company that can generate revenue from day 1 right. You can get a contract you can generate revenue but a medical device product that needs Fda approval takes five to six years before it can get Fda approval so in that period of time you are essentially financing the company by selling equity and diluting yourself down if you try to run the budget of. 3 different projects in 1 company’s equity then you find that you will dilute yourself down a lot more and consequently what you might might be trying to achieve is not being achieved. You’re making progress. Maybe. But you’re also diluting yourself down quite a bit so based on that it is better to leave the intellectual property in the holding company execute upon 1 learn a lot about that process have experienced employees and then do the next one with a greater degree of efficiency with new capital available. That means you’re differing some of your exits a little bit out but you’re not diluting yourself as much and you have more capital to play with and you can apply the learnings and lessons that you got from the first one to the second one etc and over time you end up building up an ecosystem of employees an ecosystem of investors.
Amar Sawhney: Dealmakers Lawyers accountants, etc that help you build this company and we can continue to use that from company to company going forward.
Alejandro Cremades: Now in this case, you know like you were saying you know you you continue to use this from company to company moving forward. You know and the first stop you know in that what confluent I mean confluent first company first exit you know not bad you know two hundred fifty million dollar exit. So I’m sure that that was.
Amar Sawhney: Yeah, so.
Alejandro Cremades: Remarkable. You know how did the exit come about and I’m sure that he was nerve rocking for you being the first day and so.
Amar Sawhney: Yeah, no I think in that process. Ah, ah we created sea lents to so seal the brain and spine after brain and spine surgery and we started commercializing the product so we were commercializing the product the product was doing well. It was the first product for its kind. And we were getting good revenue traction and we were we became profitable so what happened is that at this point in time this whole area of biosurgery which means seaence and things to stop bleeding and stopping scar formation. Was becoming a popular area and there were companies like Johnson and johnson that had acquired some companies in this area and covidian which is an intense competitor of of Johnson And Johnson was looking for a company that had products in this area. So as they were looking. They approached us. As did other companies that were in this space so we had 3 or 4 companies approaching us. We retained bankers to be able to optimize the deal and the bankers were able to kind of take what was an initial offer of 130000000 2 or two hundred and fifty million dollars exit and everybody did well. The investors did well. The employees did well so it was a good exit.
Alejandro Cremades: So what about dealing with bankers. You know how for the people that are listening that are perhaps you know, thinking about the x-ai or that are receiving some inbound interest. What did you learn about dynamics with bankers on how to make sure that they everyone is rowing in the same direction to make it happen like you like you guys did Jeff.
Amar Sawhney: Nope.
Amar Sawhney: So yeah, so I think what I tend to do so 1 thing to understand is that companies are best ah bought rather than sold. So when you try to go and sell a company I don’t think you have the right leverage in the upper hand so you have to wait. It’s like going fishing. You know you put the bait in you wait until there’s a few fish biting. You don’t start trying to sort of you know spear the fish from the shore kind of a situation. So I think when you have those types of bites and then because the bankers are not necessarily going to bring a lot of new companies. Ah, who are who don’t know. Ah, you because they can’t meet the particular timetable of the deal so you wait until there’s a few of them that have gotten to know you and and and have been following you. You’ve been in communication with them and then at the right time you bring in a banker. And the bankers that we tend to use. We want to find people who are specialists in medical devices. The buyers trust them and they have a good trusted relationship so that they take them seriously so we’ve used specialist banks like you know Piper Jeffrey Jpmorgan in for some of our deals when we take a company public There’s a different question. It’s a question of the analysts that might be there and and the market support that they can provide so we’ve used in that case, you know we use Morgan Stanley and Rbc and and things of that nature.
Amar Sawhney: Today. Ah for some of the work that we do. We have good relationships with again Piper Sandler we have good relationship with Guggenheim and we have good relationships with some more specialized banks like transactional banks like centraview where the people who left Jpmorgan have now gone. So. Is oftentimes about the particular banker that you’re going to use who has a certain expertise and relationship and then you need to have obviously the ancillary things the analysts who do all the documentation and stuff. But that’s tactical. The strategic stuff comes from you making sure that the the deal is. Ripe enough that other people are interested. Companies are interested and you’ve got a banker who has credibility.
Alejandro Cremades: So The next stop. Actually you know in in your journey you know talking about the dynamics and you know how to think through you know those types of process was ocular. Therapetics. You guys raised hundreds of millions and then you took the company public and that was a billion Blast Valuation. So How are saying that you guys have been able to achieve with that. So How was the journey with that. What were you guys doing and what was the biggest lesson that you took away from that experience.
Amar Sawhney: So at akalo therapeutics. We were developing basically drugs that would replace eyed drops so instead of having to take eyedrops. You would either have 1 time placements of inserts that would deliver the entire course of eye drops or you would have injections that would. Replace maybe up to ah the entire year worth of other injections. So it was a drug delivery platform that we and it’s still a public company. So there. We developed the first drug which is for delivering a steroid or anti-inflammatory after eye surgery. And it is placed into one of the tear ducts and delivers the entire course of drug and then disappears on its own soates having to take about 120 eye drops by the patient. So. It really is helpful and convenient and compliance is improved etc. So it’s ah it’s it’s going well it’s you know ah doing a decent amount and revenue and hundreds of thousands of patients are using the product. So happy about that. However, 1 thing that I realize is I’m not a big fan of going public because in the public markets. You don’t have. Investors necessarily you have a lot of traders and these traders are not as interested in what you’re going to be doing long-term but they are interested if the stock runs up a little bit. They’ll get out of the stock if then you will end up having people who are shorting your stock these types of things don’t happen when you have.
Amar Sawhney: Private markets where people are investing for the longer term and are aligned in their values for you. So I found that this was quite disillusioning and I particularly didn’t know whether a certain hedge fund was in the stock out of the stock competitively picking my brain or is trying to short me so not having that alignment I felt that. And having to go make repeated trips to New York to kind of talk about the company and and its progress was not something that I enjoyed doing I found that I would have better ways to spend my time than to be spending time with these people I didn’t respect them. So I hired in a good Ceo from ah who was running a european pharma company and he’s now running the company and doing a fiveless job and I still remain a shareholder but my learnings over there was that you know public companies require. A lot of um, extra non what I perceive as non- valueue added work and that proves to be a distraction and kind of messes with your um quality of life. So I’d rather enjoy the private sides of the markets and that’s kind of what. My choice has been up till now. So the strategy now is either ah to take the companies and hold them for a long period of time run them as private profitable companies or find ah at the appropriate time and and exit.
Amar Sawhney: And to be able to hand it off to somebody who can scale the company more and take it further.
Alejandro Cremades: Yeah, because I mean in your case, you know you also developed augmanics. You also did the access closure. You know that in this case, augmentics you sold it for 600,000,000 to Boston Scientifics and then the other one access closure. You sold it for 350000000 to car them health. So I guess the the question you know, especially to to what you are alluding now when you’re thinking about harvesting value. You know when is the right time for aqui for an acquisition and you were saying hey you know maybe. Public you know side of things I’m not so excited about it anymore. So now when thinking about selling your company before going public. How do you think about timing.
Amar Sawhney: So I think there’s a few things to consider one is what are your capital needs if the company itself has become profitable and then you’re not constantly in a fundraising crunch and so you. Have a longer horizon that you can. You’re not under any urgency any ah external stipulation. Otherwise you know if you need additional capital. So then that’s the reason to kind of think about going public if you can’t find that capital easily in the private markets. But. Companies that I have created their margins are high. The products are sort of you know, unmet needs first time products so typically the market traction is good and we are able to make them profitable in a reasonable period of time so we control our destiny at that point in time and we can take the time to see. How the product is scaling then that has to be counterbalanced with the question of what else could I be doing with my time and am I enjoying that as much so not that I don’t enjoy meeting with customers and stuff. But after meeting the twentieth and the twenty fifth customer that’s not my you know it’s only giving me that much more excitement and that much more mental stimulation if I didn’t have any other ideas didn’t have any other things to do that would be fine but I have other things that I could be doing other new things that I could be discovering and there are large companies that can take that and scale that across Europe scale that to Japan.
Amar Sawhney: That elsewhere. So then that becomes the right inflection point where we have enjoyed some of the runup but these people can take it because then my value shift from not only making you know a good exit from a dollar value but also how many patients this can touch now. This may not be a value shared by other people. But I view my success. Not only in terms of monitory things. But also the therapies that we have created how many patients is it touching every year so today I’m happy to show that over a million patients are touched by my therapies every year and I would like to grow that number to 10000000. So I think if I have to do that. I need the aid and help of these larger companies and that’s the time to exit. Ah but making sure that you’re not left too much of money on the table. The other thing that you have to look at is from the exist standpoint if you harvest the last grain of value and you don’t leave anything for the Acquirer. And the acquirer buys the company and has to either shelve it or have to realize that you know revenue is declining from there your credibility suffers. Also so 1 thing good that I feel about whatever we’ve done to date that both the selling side which is all the employees and investors have been very happy. And both the on the other side. The buying side the companies that have bought the asset are also very happy. So which mean that is the right type of transactional balance if you have only one side be very happy and the other side is not very happy like any relationship. It’s not a great place to be.
Alejandro Cremades: And as you’re thinking about relationships you know with those strategics Now we say perhaps those that you know may make an investment and maybe that investment you know matures into an acquisition. How should How should people think how should founders think about. Developing those strategic relationships.
Amar Sawhney: Yeah, so I think the strategic relationships are things that um, you know you go to trade shows. For example, you may meet with some of the strategic partners in those kinds of settings you may have in our case.
Amar Sawhney: Clinicians or doctors that are on our scientific advisory board that are also on their scientific Advisory Board. So You have some common touch point. There may be employees that have come from larger companies. There may be employees that have worked with you in the past that are now working for larger companies. So You have many exchange points. Where you can kind of open up a little bit of a conversation so you can introduce the company I would not go to them with this from the standpoint that you’re looking to sell the company or something I would just go to them from the standpoint that we want to get to know you and we want to let you know what we are doing. But not looking for anything specific right now if there is ever a chance that something specific comes up. We’ll be in touch. But right now I don’t need anything from you so it is more of a relationship without an explicit ask of any sort and you cultivate that and you keep them posted. At a particular time when you’re doing exciting things. So your credibility is greater that way than to Cry wolf all the time think there’s a deal happening. There’s a deal happening if there isn’t a deal happening. Don’t say that when there is a deal happening then they’ll believe you otherwise it’s like the boy crying wolf.
Alejandro Cremades: Now in this case, you know for you 1 thing that is really impressive to me. You know is that they I mean not only your your absolutely incredible journey as ah as an entrepreneur entrepreneur. But right now you are the Ceo of 3 companies I mean you are the the Ceo of. In this case instila rejoin and then also proman 3 hypergrowth companies. How do you go about time management with 3 companies at the same time.
Amar Sawhney: Here.
Amar Sawhney: So look all of us get only 24 hours in a day that is an asset that doesn’t change for anybody no matter who you are so clearly I can’t buy myself more time. So either I have to. Work for longer hours. But that also has a limit to it so clearly that’s not a sustainable strategy or I have to find how I become more productive in those hours that helps to some extent to be read faster be more efficient in your work but that also has its limits. What doesn’t have limits is the ability to scale by hiring the right people who can take certain tasks away from you and do them as well. If not better than how you do it which is building the right team and which is hiring the right say presidents and general managers that we have. In in these companies and also having understanding investors. So we have some investors that are shared investors and things so they understand that this is how I do it and I want to make sure that I ask myself and have an honest conversation. An honest oversight of myself. Because you can oftentimes end up in a situation that if there’s nobody to tell you then? How do you kind of get any check and balance on this and when it’s not working how do you get to know so you have to be honest with yourself about that. But so far so good. Ah, it does get a little bit.
Amar Sawhney: Challenging as these companies grow their needs increase and what I find is that at the appropriate time I will replace myself and that appropriate time typically happens pre-commercialization when I bring in a sales and marketing oriented commercial leader as the Ceo. And I will transition myself to a chairman kind of a role I still will be involved but that day-to-day functioning the commercialization that will need a lot more effort and to bring the right team members in at that point in time so that but when these are technology oriented projects. Given that I am a technologist by background my oversight is important in that so understanding what you do well and what you don’t do so well which is not as exciting and interesting to you but it is for other people and there are better people for the job bring them in at the right time.
Alejandro Cremades: So I guess now for for everything that you’ve done. You know, looking back and and looking ahead. You know, especially with this technology that you did you know as part of incept and how you’ve been licensing that and rolling different companies. You know we’re thinking about impact you know, let’s say if you were to go to sleep tonight. And you wake up in a world of Mar where the vision you know of everything that you had hope for you know is fully realized what does that world look like.
Amar Sawhney: Well, what that world looks like meaning today we’re working in for example re journey we have. We’re developing therapies to be able to treat problems inside the uterus whether these are problems of scar formation. Whether these problems are excessive bleeding or whether these are for so sterilization. Whether these are so variety of types of things so these are some of the biggest problems that women face fertility, excessive bleeding and needing contraception. So if I can kind of create products that have met these types of needs and are you know treating millions of ah women worldwide. And we’re doing the same type of a thing in general surgery. We’re doing it in neurosurgery we’re doing it in cardiology. We’re doing it in radiology and in a variety of different disciplines I would say that you know what it’s been a successful life.
Alejandro Cremades: I love that. So now we’re talking about the future here I want to talk about the past with a len of reflection. Let’s say put you into a time machine. Our and I bring you back to that moment where you were 27 years old 27 years old. You were doing the roads show with vocal, you’re now starting to think about. Maybe doing something of your own. So let’s say you’re able to sit down with that younger self and you’re able to give that younger self one piece of advice before launching a company. What would that be and why given what you know now.
Amar Sawhney: So I think the key thing a ah piece of advice is that if you believe strongly enough and also if you feel that it will make you more content and happy. Even if you have to work harder. You should. Do it in terms of taking the risk of going out and doing something on your own because people are oftentimes caught in that immobilized by fear of what might happen what could go wrong. Lots of things can go wrong. But if you have confidence in yourself, you’re 27 years old you can probably get a job somewhere else you you now have a green card. You now have a authorization to work. You will get a job somewhere else. But if you wanted to do something big and you wanted to do something by yourself and you don’t want to keep working for somebody else when is the time. So. You’re young, go ahead and take that risk of course you need to have good the other corollary to that is that the core has to be solid. You know, just like exercise the core has to be solid technology core has to be good. Because you can only dress it up so much with marketing and and ah manufacturing and all of those things. But if the core technology is not that good then I think you have to wait. So don’t just jump on the first application but make sure that the core that you’re working on is solid and you have a desire to kind of.
Amar Sawhney: Prove yourself right? and when those 2 things are there then you are unstoppable.
Alejandro Cremades: I love that. So for the people that are listening Amar a that will love to reach out and say hi. What is the best way for them to do so okay.
Amar Sawhney: Well, my email is my first name at my last name dot org it’s Amar a m a r at sahani s a WH and e y dot org.
Alejandro Cremades: Hey well easy enough. Well Amar thank you so much for being on the show today. It has been an honor to have you with us.
Amar Sawhney: My pleasure Alejandro thank you for doing this.
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