CV Ingenuity

Apr 9, 2019

Entrepreneurs Author of The Art of Startup Fundraising & Serial Entrepreneur Share to facebook Duke Rohlen Over the past year, I have been honored to interview for the DealMakers Podcast many of the most successful entrepreneurs around the world. Some of these entrepreneurs I interviewed have created multiple businesses. Yet, my recent conversation with Duke Rohlen uncovered a serial M&A expert who seems to have mastered the full cycle of hyper-growth companies. Here’s a glimpse at his story behind the scenes, his tips for raising over $400 million, landing top tier investors, and having billions of dollars in exits ( listen to the full podcast episode here ). Street Smarts & MBAs Duke was 22 when he graduated from Stanford. He and his co-founder launched a restaurant chain that grew to 10 locations, 500 employees, and $20 million in sales. Though while he loved the idea of being entrepreneurial, he did not like the idea of running restaurants or retail. So, he went back to school and got his MBA at Harvard. He says he came out of business school with not only the experience of having been an entrepreneur but with more practical and pragmatic skill sets that could be applied to the healthcare industry. One of his first companies was FoxHollow Technologies. The business was focused on developing a technology that would clean plaque out of peripheral arteries in patients suffering from peripheral arterial disease (PAD). He helped take that company public and then sold it for $780 million. Then the company was sold again two and a half years later for around $3 billion. He learned a lot and took those skills into the next company he founded, which was CV Ingenuity. Like FoxHollow, CV Ingenuity was also focused on improving patient outcomes in the treatment of PAD. CV Ingenuity’s novel technology was a drug-coated balloon that could be delivered minimally invasively to an occluded artery, and, after the balloon was inflated and the drug payload was delivered, blood flow would be restored, restenosis inhibited, and natural vessel healing would occur. The company raised $30 million and got acquired for about $300 million within three years, with just 22 people on staff. The next company Duke co-founded, built and then exited was Spirox, Inc. which had a focus on improving the quality of life for patients suffering from nasal obstruction. Ultimately the company was acquired by Entellus Medical for over $200 million. After this incredible journey, Duke still felt he could continue making a difference and built Epix Therapeutics. This was, in essence, a medical device manufacturer of cardiac ablation systems to treat patients with cardiac arrhythmias. This ended up being a $350 million exit, on about $60 million invested. His most recent company is Ajax Health which will source and provide operational and financial capabilities to a diversified portfolio of emerging medical device companies. The company has raised over $120 million from investors such as KKR. The Art of M&A Rohlen says “the M&A process is as much art as it is science, meaning that there is an enormous amount of pre-work that goes into creating a transaction.” You don’t sell companies. A company is a strategic acquisition by an acquirer. This requires a totally different approach than just hoping you can shop your startup around one day. Duke told the DealMakers audience “I know when I start a company who the buyer is and why that buyer needs our technology. I engage with that buyer consistently over the lifespan of our company.” He already knows his exit and is working to achieve that before he buys or launches a company. Trust To achieve these deals you really need to focus on establishing trust. Trust with people who you work with, your employees, trust with your financial backers, and also trust with the people that are ultimately going to be the acquirers. Duke believes that trust is the conduit of influence, and confidence is a byproduct of trust. You are going to need to demonstrate integrity and competence to build and earn that trust. Buyer Dating Perhaps the most important point in terms of selling companies is having optionality. That means the ability to go and sell the company or not. Optionality means having the financial wherewithal from a corporate funding standpoint to be able to say, "We don't need to sell the company. We can go forward.“ Duke says it's a little bit like dating. If you really, really have just one girl that you want to go after and you don't have any other options, she's going to sense that, and you're not going to be as attractive or interesting to that girl. Similarly, in a company, in a transaction mode, if you only have one option for the disposition of your company, the buyer is going to sense that there's some desperation there. They might still buy it, but more realistically they're not going to buy it, or they're going to force a significant discount on the value of that asset. The Inverted Success Factor Success in these types of deals really comes down to three main things. Only this entrepreneur has taken the steps and flipped them upside down. Business model