V Founded by Sawhney and Khosravi

V Prelude to launching spin-off companies

V Envisioned as IP holding company and technology incubator
V Retain control of IP and out-license for specific fields of use
V No development or commercialization of products on its own
V Jointly owned by founders with less than 2% ownership among
family and friends
2
 

V Founded by Sawhney shortly after Incept
V CEO Ȃ Amarpreet Sawhney; Chairman Ȃ Farhad Khosravi
V Developing applications of DzHydrogeldz technology
V Aiming at two broad sets of applications Ȃ
Adhesion prevention & Surgical sealant
V Significant uncertainty about applications Ȃ should to be
proven in the clinical trials
V On the look out for VC investor
V SVLS - Healthcare focused VC firm
V Charles Warden Ȃ expecting a promotion to partner
V Felt there was great potential in surgical sealant applications
V Confident about Sawhneyǯs and Khosraviǯs business acumen
V Concern Ȃ Licensing arrangements between Incept and Confluent
seemed restrictive on Confluent
V Interested in widening the license scope for confluent to make it an
attractive investment opportunity
V Spray Ventures already invested small amount in Confluentǯs seed
round Ȃ necessity for SVLS to move fast
V No room to bob and weave for Confluent
V Narrow set of applications Ȃ Sawhney unwilling to
broaden the license terms to cover other applications
V Concerns over the license to Confluent regarding exit
opportunity
V Charles Warden Ȃ fear of blowing the deal and losing the
promotion
V Sawhney and Khosravi Ȃ desperate need for funds; seed
capital completely depleted

DzWho will compromise?dz

 - Agreement terms in-line with the purpose of Incept
providing launching pad to other start-ups
- Limits Confluent to a few specific applications, Allows
Deal them to target particular market at a time
- Incept could become a financing vehicle in the future

- Seed capital is depleted

No - No competing VC offer for funding
Deal - Obligation to existing investors
- Other VCs may also share the same concern
 - A very good opportunity - success would pave the way
for his promotion to partnership
- Hampers his chance at partnership if this turns out to
be a blunder, exit opportunities pose a threat
Deal
- Betting on small set of unproven applications without
the insurance of having access to a platform technology
- Difficulty to bring new investors with these terms

- Already won the confidence of his colleagues.

Pulling off the term sheet would spoil his
No reputation and his group
Deal - Lost a long-term upside potential and potential
leaders
- Other VC firms would seize this opportunity
V No Deal Ȃ Pull off the Term Sheet
V Deal

£ Accept the existing terms and conditions

£ Amendments in the licensing agreement to give

Confluent access to the surgical sealant application
development

£ Negotiate with Incept to remove/change the clause

that prevents confluent from using its discoveries
V Deal signed
V Sept Ǯ99 Ȃ Confluent Raised $4mn in the private placement led by Spray
Ventures and SVLS, Spray general partner Dan Cole and Schroeder
principal Charles Warden joined Confluent's board of directors
V Nov ǯ01: Received product certification for commercial distribution of
SprayGel Adhesion Barrier in Europe
V Jun ǯ03: Awarded product certification for commercial distribution of
DuraSeal Sealant System within Europe
V 2006 Ȃ U.S. Surgical, a division of Tyco Healthcare acquires Confluent
Surgical for $245 mn
V Tyco Healthcare changes its name to