May 2009
Prophetic Victory
NIR Diagnostics Wins Wharton Business Plan Competition Michelson Grand Prize with Device That Can Predict Wound Treatment Complications
Dr. Pitamber "Pitou" Devgon, whose team recently won the 2009 Wharton Business Plan Competition (Wharton BPC) for a wound assessment device, has come a long way since his first, somewhat rocky, entrepreneurial venture in college when he created one of the original portals helping U.S. students trade textbooks.
After launching the portal, known as the Student Information Network (S.I.N.), the site received so many hits that his dorm room computer died and Devgon found himself sued by the college bookstore for taking away business. Making matters worse, a promising deal with AOL fell through. "After I cried for about a month, I received incubator funding from another university that was interested in the technology and I deferred medical school to work on that project," he said.
That business was going well, but Devgon left after a year to pursue his passion--medicine. However, during the third year of his residency in internal medicine at the University of Pennsylvania Health System, he felt the entrepreneurial itch and enrolled in Wharton's healthcare entrepreneurship course where he was able to combine both interests [To learn more about Wharton's healthcare entrepreneurship course read the "Get it Started" article, "Excellent Prognosis"].
As part of the Wharton course, he worked on a team to write a business plan for a product that assists in the feeding of premature infants. The business, TracNatal, looked promising and the team entered the Wharton BPC, making it to the semi-finals in 2008, but then had to withdraw because of IP issues with the inventor.
With those three entrepreneurial experiences behind him, Devgon was more prepared than ever to enter the Competition again this year as a first-year Wharton MBA student, with a new concept. His team, NIR Diagnostics, wrote a business plan for InfraVue, a first-of-its-kind diagnostic device to better monitor the healing of complex wounds and predict complications using near infrared technology.
The wound assessment tool most physicians use today is an ordinary ruler. A doctor typically measures a wound with a ruler to see how much it has shrunk from previous visits. This rudimentary approach means about half the time doctors miss opportunities to adjust therapies and alter patient outcomes, says Devgon.
"Thanks to the Healthcare Entrepreneurship Course last year, we realized we had to be very focused," says Devgon. "There is so much technology out there and we wanted something we could sink our teeth into, so we picked a device within a niche market. We didn't want to be competing in a giant field, but rather one that is underserved and rapidly growing."
In the presentation at the Wharton BPC Venture Finals, Devgon explained that the market for this device, driven by an increase in obesity and diabetes, is worth $1.1 billion. With no infrared technologies currently on the market for wound care, he said that the path is clear for InfraVue to gain acceptance by home health agencies, extended care facilities, and outpatient wound care centers. The device costs $35,000, but the team plans to emphasize a more affordable leasing model. As for IP issues, they aren't likely to get in the way this year, as the team has outlined a clear path to licensing the technology and the inventors are supportive of the process.
After deliberations, the judges awarded NIR Diagnostics the Michelson Grand Prize of $20,000. The team also won over the Venture Finals audience which chose NIR for the $3,000 "People's Choice" Award. Devgon's team includes graduating Wharton MBA students Xiaoming Fang and Bosun Hau as well as Dr. Armen Karamanian. Karamanian is an M.D. from Argentina completing his PhD at Penn's School of Medicine with formidable experience in the Wharton BPC, having reached the semi-final round three prior times. One of Karamanian's teams made the 2008 finals and another, Fodius, received acceptance to WEP's educational incubator, the Wharton Venture Initiation Program.
The NIR Diagnostics team says it is fully committed to moving the company forward this summer in Philadelphia. Their immediate goals include completing the licensing agreement, expanding the human pilot study, and pursuing seed and early-stage funding.
The second-place winner of the Wharton BPC was CuddleBots, a team which is developing a fully-programmable robotic toy for children ages 6-14 years old. The team explained that the toy also would interest adults, as it comes with open source software that allows any programmer to design new applications for the robots. These programs can then be sold in the CuddleBots online marketplace for owners to download to their robots.
While the price tag of $250 might deter some parents from buying a CuddleBot, team leader Joseph Zwillinger, a Wharton MBA student, told the judges that most parents spend an average of $350 a year on toys. In addition to emphasizing the educational aspects of the product, he explained that they plan to target more affluent households.
After learning that they won second place, Zwillinger said his team plans to spend the next year working on the development of the product while he completes his MBA. When they are ready to launch, they plan to set up shop in the San Francisco Bay Area.
The third place winner was RealisticEye, a team comprised of executive MBA students from Wharton's program in San Francisco. Their plan featured technology that makes artificial eyes look more natural by appearing to dilate. The team, which was formed in WEP's "Formation and Implementation of Entrepreneurial Ventures" course, explained to the judges how more than one in 400 Americans currently wear an ocular prosthesis due to injury or disease, creating a potential market of more than 750,000 people. They plan to work with the 400 ocularists in the U.S. who custom-make artificial eyes to sell the product to patients.
After winning $5,000 at the Venture Finals, RealisticEye team leader Christiaan Schaeffer said they are excited to launch the business this summer in Oakland, CA, where team member Dr. Erich Horn has an ophthalmology practice. With the help of legal services won in addition to their cash prize, the group is currently incorporating the business and tweaking the business plan based on the judges' comments. He added, "during our trip to Philadelphia, we were able to visit another ocularist who has committed to helping us with our market test. All in all, we are ready to go."
Rounding out the winners was Wharton undergraduate student Daniel Harbuck and his plan for StealthRowing, which won the Gloeckner Undergraduate Award of $5,000. His plan focused on a new type of boat that can be used in swimming pools to provide both balance and synchronization training for rowers. Its key advantages are that it takes up less space than traditional boats and is a fraction of the cost of a rowing tank. A few weeks before the Venture Finals, Harbuck won Penn's Weiss Tech House PennVention grand prize for best invention.
The other "Great Eight" finalists included: DocASAP, an online medical appointment scheduling service; Myvideoport, an online video distribution platform and marketplace for professional content; PayDivvy, a financial technology company providing collective payment and finance services for roommates; and Remote Integrated Monitoring Solutions, Inc., a company offering a noninvasive glucose monitoring system for diabetics.
Judging this year's finals were Wharton MBA alumni: William Egan, founder and general partner of Alta Communications & Marion Equity Partners; Evan Jones, managing member of jVen Capital, LLC; David Piacquad, senior vice president of business development at Schering-Plough Corp.; and Fred Wilson, partner at Union Square Ventures. David Cohen, president of Karlin Asset Management, also served as a judge.
Despite the daunting challenges of starting a business in this economic environment, the Wharton BPC saw an increase in interest in 2009, with 162 submissions compared to 145 last year. Managed by Wharton Entrepreneurial Programs, the Competition begins in the fall when student teams submit summaries of their business concepts. Teams compete throughout the year until 25 semi-finalists are chosen to submit complete business plans. That group is then whittled down to the "Great Eight" finalists who compete in the Venture Finals.
The BPC has seen numerous teams go on to become successful businesses such as PayMyBills.com, buySafe, NetConversions, Integral Molecular, DealMaven, InfraScan, Verge Solutions, Embrace Pet Insurance, PetPlan USA, and MicroMRI. If the success of past teams is any indication of their future, this year's teams should feel confident--at least seven of the grand prize winners in the past decade are still in business, with several earning millions in revenue and/or received financing.
Posted May 2009