Learn how Amar Sawhney, who arrived in the U.S with only $500, co founded and launched Incept, an innovative science incubator that’s created nine businesses, 1,000 American jobs, 120 patents and generated over $1 billion in revenue.
In 1983, Amar Sawhney came to the U.S from his native India, with only $500 in his pocket, a fellowship at the University of Texas to study chemical engineering, and an unusually inquiring mind. Thirty years later, he is the co-founder of Incept, an innovative Boston-based medical device “company-creator,” that has nurtured nine businesses, created more than 1,6 00 American jobs, registered an excess of 120 patents—and produced no failures.
Here’s his story:
Coming to America
The son of an air force pilot, Sawhney grew up “all over India,” he says. A brilliant student, as well as a deeply religious Sikh, he studied chemical engineering at the elite Indian Institute of Technology. After graduating in 1987 he was offered a plum job with a subsidiary of Unilever, but decided instead to take a fellowship offer from the University of Texas Austin. “This was an opportunity to explore something new–to come to the United States ” he says. “I figured I could always go back and get that job.”
Sawhney decided he’d finish his degree, then pinpoint his next step. But Sawhney was in for a rude awakening. In India, he would have automatically been matched up to work on projects that fit his interests, but in the more assertive and individualistic culture of the U.S., it turned out that he was supposed to take the initiative. By the time he figured it out, “the pickings were slim,” he says. He ended up working on what was considered a low-status project, assisting a young professor developing a process using polymers to prevent scarring in gynecologic surgery.
This early work was a failure, but it led to something much bigger. In order to stay in the United States, Sawhney enrolled in the Ph.D. program, focusing on groundbreaking research that drew partially on the polymer work he’d done previously. Ultimately, he developed a process that made it possible using light activation to create a biodegradable hydrogel sealant for living tissue without harming any of that tissue.
First Job
The promise of this research attracted venture capital firms, and Sawhney ended up joining a Boston firm named Focal, which was interested in the surgical sealant for use in gynecological surgery. Sawhney became employe number one at Focal and took on the responsibility of setting up a research lab and hiring staff. Although the sealant failed in a major clinical trial, it turned out to be very successful in lung surgery, which eventually led to collaboration with Johnson & Johnson and an IPO.
Sawhney learned an important lesson: patents and intellectual property belong to the company, not the researcher.
Lesson Learned: The Enduring Value of Intellectual Property
Although things seemed to be going great for Sawhney, he was about to learn an important lesson: patents and intellectual property belong to the company, not the researcher. That was when Sawhney decided he’d had enough of life as a researcher on a salary and wanted to run his own show. But when he asked the company to let him license some of their technology, which included 50 of his own patents, the top brass refused. Sawhney left anyway, agreeing to a one-year non-compete, and in 1998 started a business called Confluent Surgical, initially targeting adhesion prevention, but intending to focus on surgical sealants after the non-compete expired.
The Birth of Incept, An Innovative Incubator
Around that time, Sawhney began brainstorming with a like-minded former colleague from Focal, Fred Khosravi, an Iranian Kurd, who had already started planning his own business. Putting their heads together, the two friends developed an idea for a novel type of incubator company. Called Incept, it would be an intellectual property bank, owning all the ideas developed by both Sawhney and Khosravi, such as surgical technology that could be used in every specialty from gynecology to ophthalmology to seal organs at risk for leakage, or for separating an impaired organ from nearby healthy ones.
Incept’s modus operandi would be to tweak the technology the partners had created to target a variety of surgical customers. Then the partners would license their technology—but only to their own startups, and each company would receive a license only for a particular use—say, a surgical sealant for protection during brain surgery. Some of the businesses would rely on technology developed by Sawhney, while others would use IP created by Khosravi. But the partners would share in each other’s profits, as well as the proceeds from sales of their startups.
The partners have started nine companies, sold three for a total of $1.15 billion, and raised around $300 million in venture capital
Step Two: Putting Their Ideas Into Practice
Khosravi, who had a head start on Sawhney, had already created a company, Embolic Protection, aimed at cardiologists and based on his own work, and sold it to Boston Scientific for $158 million. “That was the first test of our partnership,” says Sawhney. The reason: His partner wrote him a “multimillion dollar check,” whilst Sawhney was still perfecting the technology for his own first company, Confluent Surgical.
Building Confluent SurgicalUS
Once the technology was in place, Sawhney set out to uphold his part of the Incept arrangement by raising raise venture capital funds for Confluent. It took some doing. “Most of the VCs thought our approach was highly unusual,” he says. “It required some explaining.” After one year and meetings with at least 50 VCs, Sawhney had raised $4 million of an eventual $60 million in funding for Confluent, enough to finance proper research facilities. With the non-compete safely past its expiration date, Sawhney was able to start focusing Confluent on use in brain surgery. It was approved for sale in Europe in 2003, but the real break came when DuraSeal (the sealant for neurosurgery) was approved in 2005 in the U.S. Sawhney began exhibiting at trade shows, where the clinicians and surgeons he met there indicated they were excited about the product. In short order, he set up a network of about 15 distributors to sell the application.
“If the audience is more focused and there’s not as much competition, you can go through distributors,” says Sawhney. “When there’s a lot of noise, you won’t get enough mindshare if you sell that way.”
Selling
That set a pattern for sales at all Incent’s companies. Products aimed at smaller markets or that were unique went through distributors. On the other hand, applications facing more competition were sold through the company’s direct sales force. “If the audience is more focused and there’s not as much competition, you can go through distributors,” says Sawhney. “When there’s a lot of noise, you won’t get enough mindshare if you sell that way.”
In 2006, Sawhney sold the Confluent to healthcare products company, Covidien for $245 million.
Results
Following these early successes, Incept’s co-founders nurtured an impressive list of startups, employing either Sawhney’s technology platform, or applications developed by Khosravi. This list includes MarketRx, AccessClosure, Nellis, Ocular-Therapeutix, Sadra Medical and Augmenix, some of which were sold to large medical and pharmaceutical concerns, while others are still in development. In total, the partners have started nine companies, sold three for a total of $1.15 billion, and raised around $300 million in venture capital. While the majority of ownership is held by VCs, the holding company still gets royalties for all its projects. Says Sawhney, it comes to “millions of dollars every year.”