Assessment of Fred Khosravi’s career and record as a medical device entrepreneur free essay sample

Fred has gradually built a reputable name for himself as a medical device entrepreneur. In order to do this, he has been found to deliver on the major requirements that venture capitalists and private investors look for before they invest. These can be seen below.   He has repeatedly delivered cutting edge, best-in-class commercial medical devices that have been able to capture a sizeable part of the market. He has successfully founded seven start-up companies in this field because of his understanding of providing value propositions and of raising money to support these ventures.  Two years after Boston Scientific bought Fred Khosravi’s fifth start up (EPI), the EPI filter generated $65 million in revenue and captured an impressive 70% market share. AccessClosure’s Matrix was expected to capture 20% of the closure market and Finale, 50-60% within ten years of launch.He has been able to deliver increasingly attractive returns to shareholders of his firms.   He started with Focal, which overall earned investors a nominal return on their investment. By the time his fifth company Embolic Protection Inc. (EPI) was sold to Boston Scientific, investors of series-A shares got over 18 times return on their investment.   He has also been able to establish a good rapport with the VC community, thereby making it easy to get funding for his projects.  Initially, Fred Khosravi had been wary of the Venture Capital community. However, he had gradually built a name in that community, starting with Mark Levin, partner Mayfield Fund, in his first start up, Focal Therapeutics. Levin ended up also playing a mentoring role to Fred. At Endotex, his second startup, he conceded the CEO role to someone else because he felt that he would bring the required discipline to the company. This showed a commitment to the success of the company. At this time, investors even stuck around while the company was going through some hurdles. Later on, he secured repeated investment from ONSET Ventures and got funding from other VCs and private investors.  He has formed good relationships with other entrepreneurs and with co-workers thereby giving him credibility during the due diligence process that venture capitalists go through before they offer funding.  He developed a strong relationship with co-founder (Prof. Ulrich Sigwart) during the setup of Endotex, when he helped Sigwart negotiate the terms of the licensing agreement. Khosravi had a lot of credibility with senior management at Boston Scientific.  He has formed good relationships licensing authorities.  Khosravi’s good rapport with the FDA is a great plus for him as an entrepreneur. Regulatory bodies are a serious threat to companies and can restrict entry into the industry. He has been able to show that he is transparent and this has made him trustworthy and has sped up his requests for licensing from the authority.  Rules or generalizations about medical device startups based on Khosravi’s experiences.  Based on Khosravi’s experiences I can derive that some of the rules about medical device startups include: a) Constant improvement must be the order of the day. This is because this is a highly innovative industry with a high risk of obsolescence. You can see Khosravi do this at Endotex when they had to restart so that they could out-do the competition. b) The company must ensure that it develops credibility with the FDA. This is a heavily regulated industry because of the risk to human health. Developing credibility is essentially a sales job. The company must be transparent, open and honest with the FDA. For example, AccessClosure’s Matrix was able to get speedy FDA approval because the company made it clear that it had nothing to hide. It filed in November 2004 and got approved by May 2005. c)The entrepreneur must be ready for buyouts. This is because this industry has a high level of merger and acquisitions. Khosravi was always ready for the possibility of a buyout and if it came, he moved on to develop the next medical device. d)Liquidity is not the ultimate test of success It is more important to develop technology that would meet the needs of the customer base. Khosravi’s test for this was that if after interviewing the physicians, they only found it ‘interesting’ and did not say it met their needs, it was not good enough. Assessment of AccessClosure Incorporated. Criticism of how the company has been managed. Opinion about how it has been financed. Management I believe that AccessClosure is a well-managed company.  Team members from the earlier Khosravi start-ups manage it so there is an understanding of the culture.  The company’s policy is to look out for staff with passion and enthusiasm, a good track record and sound judgment and then cultivate them for leadership positions. For example, the VP, Advanced Technology at AccessClosure worked with Khosravi at EPI. Funding AccessClosure has had an incredibly easy time with regards with financing. It has not met with the hurdles that a lot of entrepreneurs meet with.  A venture capital firm (ONSET Ventures) that has had a positive long-standing relationship with the founder is one of the sources of seed funding for AccessClosure. This is a plus for the organization in case it needs to round up more funds. It will help in raising funds quicker and will make the process quicker because the due diligence process is already established. AccessClosure is also got seed funds from some private investors in 2002. In July 2004, it raised an additional $10 million from a group of investors including ONSET and Three Arch Partners. At the very beginning, Khosravi realized that a startup has to both create value propositions and raise money. Unlike a number of startup companies, AccessClosure has never run out of money. This is a testament to the sound finance minds (especially Khosravi) that run this organization.