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In The Big Exit Show by Peak and NP-Hard our hosts Johan van Mil and Anke Huiskes talk to tech entrepreneurs about scaling their companies and the route on making a successful exit.
[00:00:00] Eline: I just hunted those investors down. I did not know how to approach them, but I was just on top of it. I just, it just needed to happen. So I was just, you know, hunting and now
starting to come money. Well, depths easy. You set up some desk gutter, a few friends order, a few boxes of pizza and your in business, selling your company.
That's a whole different story. Finding the right buyers, agreeing on the terms and conditions and setting a fair price in the big exit. The Capitol, we lift the curtain of secrecy of selling ambitious scale-ups by talking to successful technology founder who have been in this rollercoaster. My name is Remy Gieling, and my name is Johan van Mil
In this episode, we talked to a Nightbalance founder Eline van Beest, who sold her company night balance in 2018 to healthcare giant Phillips for an undisclosed amount. And it's been a tech investor herself ever since in the next 40 minutes, you will get to know her insights on extinct company, her latest endeavors and the path, how she got there.
[00:01:00] Elina . So good to have you with us. Thank you so much. So Madina, what's the, what's a heroic story of knives. Uh, the heroic story is about a young student who had a mission inspired by her father. And, um, uh, I had a, um, teacher who wouldn't, who would not want me to work on that program. I convinced him, um, I had a couple of, uh, setbacks and then was able to graduate on that.
I then spun out with, uh, with the project. It was, um, medical device for the treatment of sleep. Um, I spun out and, um, uh, raised a company. So that's, this was night bounds, um, raised my first investment round one and a half years later, uh, did a lot of clinical research over 80,000 nights in clinical research to prove that the therapy was working for apnea patients.
And then the company was acquired by Phillips in 2018.
[00:02:00] Actual story. Yeah. I already started a little bit of the actual stories is, um, a lot of setbacks. So I always say I had a reason to quit every single day. And this started with my teacher who didn't believe in the project and he wouldn't let me graduate. Yeah. Um, but it was also the first investors who really didn't believe in the story I had.
I mean, I was a very young and inexperienced student and I'd never done a medical device. So why would you believe something like that? I had so many feedback from people saying that the product wasn't right. Um, there's two days ago, I spoke to somebody who did research on my project and now how, how ruthlessly he, he completely, uh, Yeah, destroyed my project because of his research outcomes.
I couldn't remember that, but I had so many people who were negative about it. Um, but not only that, I mean, after the first investment, uh, our, our clinical first clinical trial that we did was a misery by [00:03:00] design. So, but we didn't know how to design the clinical trial. So we were including completely the wrong patients.
So we would never get good outcomes. Um, I hired the wrong people. I was a poor manager. I did not know how to manage people. So yeah. Great people that finally came, they left again because I was, I was a poor manager to them. Uh, I had to learn everything from scratch.
the startup phase. So 89, can you explain to the listeners what not balance was? So it was a small sensor that, um, treats, um, Positional sleep apnea. So a sleep apnea stops of breath during your sleep and this, um, normally a cure is when you, when you lay on your back, your tongue falls in your throat and it collapses.
So it really blocks your throat from, uh, from breathing. Um, so what we did, we had this smell sensor, you wear it above your stomach, under your test, and it [00:04:00] continuously measures your sleeping position. And, um, What we try to do is train people to sleep on their sides because on the side, the tongue doesn't block the, the airway, um, and, um, uh, the airway stays free.
So for over 50% of all apnea patients, this was a solution instead of where. Um, positive airway pressure masks, or mandibular advancement devices, which are braces keeping your lower job front. So that was the therapy that, that I developed at the university. Um, and it was a new to the world therapy. So it was not done before.
So we really had to clinically prove the effectiveness of the device. Compared to the golden standard. So this was these breathing machines, uh, to prove that it was at least as effective and that patients, um, would use it the entire night and would be compliant to the thing. Now I read somewhere that's before you started night balance, uh, you were still university of course, um, that you had this dream to become.
[00:05:00] A I'm a business consultant. Why in heavens earth? Did she ever thought that was a good idea? Well, um, I loved, uh, challenges. I loved steep learning curve, so I really wanted to learn fast and, and a lot, and I love changing environments. Um, and I loved, you know, the intellectual, um, uh, Challenged that I got in that.
So this was an environment that really fit me, the challenge, the, the pace of work, um, the, um, learning from people around you. Um, but then I had this, you know, this mission to bring this new device to patients. And when I, when I'd worked on it, it was an idea of my fathers and, uh, I developed the product and yeah.
And then I realized, okay, but now it developed product is patients are not going to be helped by this because somebody needs to produce it. Somebody needs to clinically prove it. Somebody needs to who's that somebody's going to be. So initially I thought, I need to find a [00:06:00] company who starts doing this and obviously that company can't be found.
So then I figured, okay, you know what? I'll make a business plan for my father so that he can start doing that. And as I made the business plan, I realized, okay, he's not going to do it. He's a doctor. Um, Okay, so maybe I should do it. So that's really how I sort of rolled into it and then figure out, okay, I'm going to give myself one year.
How naive, I mean, seriously. And from that, I just, you know, uh, that, that's how it all started. Yeah. It started with a tennis ball in the Becca for pajamas, right? Correct. How many pivots did you do until the product, which was eventually bought by, by Phillips? How many pivots in terms of product, but also in terms of market, et cetera, the product did not change that much.
So we did. So the, the concept. Was PR the concept of positional therapy was proven with a tennis ball. So that just kept people from sleeping on their backs, but everybody was complaining about back pain in the morning and people were sleeping on [00:07:00] top of the tennis ball. And, um, the interesting part was as well at the beginning, it would keep people from sleeping on the back, but people would train themselves to sleep on top of it.
It's like living next to a train station at a certain point in time. You don't hear the trains anymore. That's what happens to something that. Passive during the night and, and you actually train yourself not to respond to it. So we knew it had to be something active. That we worked with, we started with RFID tags and beds that would inflate partially rolling to the side pillowcases that would inflate.
I mean, there was thousands of ideas that we literally tested. We made mock-ups. We tested with people and pretty soon we came to the idea, um, of a sensor that was worn on the, on the chest. Um, uh, we did research with Taino to understand which areas of the body were most sensitive. To feed back during sleep.
Um, so the concept was actually there quite soon, but the market, however, so we started off with back patients [00:08:00] and, um, talking to two doctors, I found that a lot of the doctors did not see the correlation between wrong sleeping positions and back pain, which was my dad's original. You know, area. So then I figured, okay, so first I need to sell the problem before I can start selling the, the answer to it.
So, um, and then during these presentations that I was giving loads of people came up with other ideas. What about sleepwalking? What about snoring? What about sleep apnea? What about a bed? You know, people that walked during their, um, uh, or I've already said sleepwalking. Um, so there were so many too. Um, sudden infant death syndrome and another thing it was so babies sleeping on their stomach.
So there were loads of different areas that we could go at and directions that we could go into. Um, so I started doing research and I, I basically talked to loads of different people to understand where the need was highest and, um, With apnea doctors, long physicians, ENT specialists, they just said, okay, if you [00:09:00] have a different solution here, that's the golden egg, because there's so many patients in compliant to current therapies.
Um, we really need something here. And that was really like, they were dragging it out of my hands. Can I test it? Can I test it with my patients? I love this idea. Can we do something? Yeah. So it was really pulling us. And then I understood, okay, that's the place where we, where we have to be. Now, the first year you answered a lot of start-up competitions and you won like a hundred grand with all these, with all these bitches you did that you won.
So people were very enthusiastic about your, your concept and your ID, uh, but preparing for those bitches and entering and, and giving your talks takes a lot of time as well, which you at Feis fellow startup entrepreneurs to, to enter in these kinds of competition. Depending on your experience. So for me, that was fantastic because I learned to present.
So you have to know about me that I was a horrible presenter. When I started, I was so afraid of being on stage. I literally had to memorize every [00:10:00] single sentence I said, and, and I'd. I had put in my brain, I would take steps on the stage that I was at. And every step would be a different cue for different part of my story, because I had just had to memorize it.
It was so nerve wracking. So the night before I had to do a presentation, I would not sleep just because of my nerves. So I, and I happy I did that because I had to go through it, not knowing that how many presentations I was going to give, you know, in my life. So I'm happy. I went through that and now. It feels like I'm talking to somebody, like, you always know what to say.
Um, and that's the same being on stage, but you have to go through that. So I really am very grateful that I did that. The second thing is I got loads of really good feedback. So. People's shooting holes in my plans. And these were old judges, these juries they're all experienced entrepreneurs or investors and the holes that they see, that's what the market is going to see.
And that's what your investors are going to see. So I took that as feedback and the iPhone found [00:11:00] that being really helpful on, on my plans. So now, however that I've gone through it, it does cost a lot of time and energy. Um, I'm not nervous for presenting anymore. And I have my people around me that provided me with the feedback.
So I still look for the active feedback with investors, with advisors. I get loads of people around me. Um, but I would not go into that competition, uh, field again, because it just, just, just because of the time and, and I want to be as efficient as. Before where the growth is. One, one question there's a lot of talking and I think very good talking on diversity these days, these days, right?
What's your personal experience as a founder of a company also in a medical environment and pretty, I think Y Y it's male dominated environment, right? What's your experience also with it. And what kind of suggestions do you have for, for listeners? So, um, Yes, it was extremely white male dominated and it has a pro and a console on the pro side.
I've, I've always been the excuse
[00:12:00] English word for that, but, um, so I've been put on stage, um, For example, the exit of Phillips I've been put on stage with the CEO of, and founder of collab, because at that time worth 15 billion or something, I don't know. And Edwin, Moses, who from the CEO, from and other billion dollar company, and then me, so that was.
Obviously, we don't have a lady in this position. So we'll look for the somebody who comes closest, the new kid on the block. Exactly. So, uh, but on the, so that's the positive of that is I get a lot of opportunities. I get a lot of chances. Uh I'm I'm easily in the picture. Um, Uh, but that only helps you so little because in the boardroom, um, uh, in your management team, um, talking to doctors, um, the unconscious bias [00:13:00] is just.
Yeah, undescribable and, and even people who tell me that. So people in my own team who say that they're absolutely. I mean, they think it's ridiculous and et cetera, but then I I'd give them a. Uh, a little joke, you know, the, you know, these, these, these quizzes that you do. So there's, um, a dad sitting in with his son in the car and going forward job offer and, uh, the driving really fast because he's late and yada, yada, yada, and then all of a sudden, the CEO of the company, that billion dollar company calls them.
Saying good luck with your job offer. And um, how can that be? And everybody's like, it's it's um, his, his grandfather. No, no, no. Um, so the dad's also the driver, um, but nobody thinks that it could be his mom, you know? So, so it's those cues and I could, I could do this. I could ask this question and nobody thinks of it.
Yeah. And that's so fascinating. Um, [00:14:00] we're we're we're eyes wide open, just stepping into it. Yeah. And it's really hard. Being a female to explain that because everybody say, oh yeah, you just say that because you're a female, but it's really, it's really there.
into the growth phase because we want to have loads of time to talk about the Xs as well. Uh, from Peak as a SaaS and a software investor. I know that raising money with hardware. It's really, really hard. That's why it's hard where right. Then not software. Well, how did you convince the investors to step in what was the, the, the, the big dream that you sold, but how did he, how did you convince them?
So, um, I did not know this when I started, but the market for sleep apnea is very big. So there is a, it's a three, $4 billion market annually. Um, and there's only two solutions out there. C-PAP positive air pressure and there's mandibular advancement devices for which the [00:15:00] compliance was quite low. So 50 to 60%.
So meaning that you know, of this billion dollar market, half of the patients are not happy. They're not using their device. So there is so obviously clearly space for another solution. Um, and of course I got loads of feedback and people saying, you can do this in your phone or, but for, um, for. For a disease.
You're not going to use an app. So if you're a seriously ill, you want a serious treatment. And, um, uh, investors in the medical space understand that, uh, doctors understand that and patients who actually live their disease understand that. And, um, so the good thing was we had strong IP. Um, the market was obviously there.
Um, we could show, even though our first clinical trials were poorly set up, we could really show the efficacy and then that just becomes execution. So you, then the question [00:16:00] becomes, are you able to, you know, make your, you know, do your clinical trials, right. Get the right people in place. Um, um, roll this out.
And that was my story with the three times being rejected for the insurance companies. It wasn't a question whether it was going to happen. The question was just when, because the efficacy was clearly there, the patients were there. The doctor, every single doctor in the Netherlands had already prescribed the device, but patients were paying for themselves.
So, um, That made it quite easy to, to convince investors in that sense and people are paying for it themselves. Right. So then you really solve a pain. Yeah, yeah. Yeah. What was it like to start raising money? Because you are a first time entrepreneur, so it, it, it must be kind of daunting. All the things that they have to, to, to deal with, I guess.
I, I just, uh, I just, uh, hunted those investors down. I did not know how to approach them, but I just hunted them down. And [00:17:00] ha how did you do that too? So, but what I did every single time is I created this Excel sheet with this list of investors that I met. And, um, in the process, I would always look for the positive and the good news.
If it wasn't there, I would make it. So I would create, I I'd invite patients to come out and we'd make a video. And they would share their experience. And I would send that video to investors. Two weeks later, I'd, I'd start a new trial and a new hospital. And I interview the doctor and take a picture and we would send that we would hire a new person or any news that I had.
I really try to frame it and make it in. Make them feel that we were on it, it was happening. It was a sport to me too, to respond within minutes to investors. And any light question that I got, I would completely over the top, give them a PowerPoint presentation or whatever, a document. Um, that would completely wipe out the question.
[00:18:00] So I was just on top of everything and I was continuously. Emailing everybody. If I had a question from one investor, by the way, I would also send the answers. Very good. They would know, oh, there's other people asking questions, not only in Dutch, but also international rights. So that's international appetite for the data room.
I would, you know, the data room would have, you know, sections that somebody never asked for it because they understand that the data room was, you know, visited by other investors too. So those are. Those are things that I did. And I was just on top of it. I just, it just needed to happen. So I was just, you know, yeah.
Hunting them down as a founder. You said somewhere that he always likes to get an evaluation from the investor first to see what they thought the company was worth. And then you started modeling, uh, what you thought it was worth these days. You are also an investor yourselves. Do you w what, what do you prefer now?
[00:19:00] Yeah. So, so the reason for that, by the way, so the first round that was raising, I, I was looking for 400,000 and, um, the first offer that I got, I remember was. 79% of my share 4, 4, 4, 4 of those 400 K, but Hey, it was an offer. So the first thing I did is go to all the other investors saying I have an offer.
I have two weeks. Um, if you, if you want to make a counter offer, Um, send it to me. So, so, um, so the, the offer, obviously it was horrible, but then, um, for the same 400 IFC, I got a way lower percentage from a different investor and I was negotiating with them and they would not lower that percentage. And I just figured, okay.
Um, if you're not going to lower the percentage, uh, and that was a clear cut to them because they were early stage investors and they just wanted a certain share. Uh, then we have to hire them out. [00:20:00] So we finally raised over a million in that round for that same percentage. So we need to go shoot it the different, the other direction.
And that's how I really found out that it, it sometimes is just the ticket size of an investor or it's, it's about the rules that they entirely have on the, on the stake that they take. Um, so it comes so. Precise and it's, you can't see that on the outside from an investor. Right. So, um, I still liked that approach, uh, being on the other side, I'm often scared off by, um, valuations that startups have and the, the, the, the image that they have of themselves, um, even so that I think, okay, I'm not even going to start this discussion because it's always a nasty discussion to have with founders that have a certain picture in their mind, and you have to tell them well, A 10th of that, maybe, you know, so then it's, it's just, yeah.
And then you just, they open up with evaluation themselves, apparently. Yes. So that's why I'm saying, being on the investor side now. Um, I still think [00:21:00] that, um, the, from, from my side personally, um, it's a, it's a more convenient way to have the investors do. Yeah. Would you be an advice for founders? Maybe. So, so to, to ask proactively, unless you, you know, that you're realistic.
Right? So, and, and, um, you're realistic when, when you've spoken to a lot of investors and you have some experience in the field until that time you hear cowboy stories, because every, we had tells the cowboy stories or the beautiful stories on the outside, and you think, Hey, well that sounds like something in my ballpark let's do this.
Right. And, and you can't. Yeah. Support, we can work around it. We can always round down into the negotiations. Yeah. And we want to show that we're bold and beautiful and, and we have a vision, et cetera. But, um, it also scares in, in my case, and this is maybe the tech space specifically, that might, that is also the SAS tech and the marketplace.
So yeah, I would agree with you that part. Yeah. Yeah. But they are, and maybe it's style. I tend to be more than. [00:22:00] Humble site then, but I think also in terms of valuation, you can raise here a very large amount or very chunk, a big chunk of money. Right. But I think if, if you are you as a company ready for that, right?
Because otherwise you will have a big failure operation now, but then you run into the problem later that the next investor will not join. Right. So I think it's very good to, to raise some decent money indeed, but have a very good plan and a very tight. Good. Solidation very foundation for that. Really?
The exits you had a plan also to IPO your company, right? That was one of the options that you had when you were selling your company indeed to Phillips, but also you were thinking also on raising around this as well. So you had different options on the table for yourself as you could do. How, how did you make that choice?
Where to go. We did have discussions about an IPO. Um, uh, and at that time, I don't think, I don't think the window was really there for us, but we were talking [00:23:00] about it and we were looking at it as an alternative. One of my competitors, I would say with, with, um, with, uh, not a superior product, uh, it's still dysfunctional.
And, um, they don't have a lot of, no seriously, they, they, the clinical trials are, are, are not that good, but they went IPO and N and there are over 500 million, uh, on their launch in, in the market. And then I really felt, okay, well, maybe we've made the wrong decision there, but, um, So it wasn't option. Uh, we did talk to banks, um, but the offer from Phil was already was on the table.
Um, and, um, the negotiations were, were, were going on and, and everybody was getting quite excited. So that point we figured, and we made a decision to pull through and go for the exit. Um, what was your personal reasons to sell and to company eventually? So. I knew we, I [00:24:00] had to sell it. Uh, when I started it, when I took the first money, I knew I had to sell it.
So, um, uh, and my mission had always been to bring the product to the patient. Um, and. It made so much sense that Phillips who has thousands of people on the street, visiting all these doctors, they were already doing over a billion in sales and in sleep apnea market. It made so much sense to use all of that instead of building all of that myself.
Um, and, and my mission was to bring it to the patient. So that was the fastest route to it. So that was. That made it very easy for me to let go of that. Yeah. And how did the process went? How did the process, did you hire external expertise that you do for yourself to help of the feces involved? Um, yeah, so I, my, my feces definitely helped me out a lot.
Um, and I, I think though they, in the beginning, they left a lot to me as a CEO and I also also got the message saying, okay, if we're on your side, then they won't, um, [00:25:00] You won't be trusted or seen as a good CEO if you need help from your investors. But now on the other side, I think that's dumb because investors do this every single week, every single month they're experienced in this as a CEO.
Once maybe twice in her life. So it doesn't, it doesn't, so it really doesn't matter. That makes sense to do that on your own. So, um, yeah, I'm very happy that my investors and, and especially the, um, uh, the chairman of my board, he was dubbed the chief exit officer because he'd done so many exits in his life before.
Um, so he really helped me with the, uh, with the negotiations and the CFO. So we did the three of us were there, dude, that didn't hire any other external? No. So. Typically, you could look for a lot of different companies that could, that could acquire you in our case. Uh, I'd spoken to Philips two years earlier, they were already interested.
Um, so you have to know this at these conferences where they were, [00:26:00] all the industry comes together. We always looked for. Literally a space that was opposite of Phillips or opposite of ResMed's. So those are the two big players in the field. So they'd see me grow every single year. I seen more doctors coming by and we got to know
leadership teams are there at these conferences because they entire industry comes together. So they knew us for years. So when I mentioned I was doing a fundraising. Um, uh, they said just shouldn't be, be talking. Um, so we did talk and they moved very slowly. So I said, okay, you have to do something.
Otherwise I'm going to do a 10 million round. I don't think they believed me. Um, and they were still taking their time. So I decided, okay, well, I'll have to do the, the, the round with Hilda and the ink F became a 12 and a half million round. And, uh, we closed it and then Phillips was okay, next time round.
When I mentioned we're going to do a bigger one. Um, we're going to be [00:27:00] focusing on closing next year, if you're into this interested in talking the times now, and that that's the moment when they speed it up their process. And, um, they came with an offer quite soon. Uh, and we obviously knew their biggest competitor as well.
So we literally had the same presentations in the same week for them and their biggest competitor, really. So really lining that, uh, lining that up, uh, Pregnant by the way. Um, so I flew up and down until I could, I was not allowed to fly anymore. So, um, and then did everything what's now normal, but we did that.
The rest was digital. Um, so that I could work from home basically and do the last negotiations. So we didn't, we didn't need anybody else. Two huge players in this field. So those were very clear exit investors, right? If there are only two potential buyers to the company, right. To step in at such a late time and then sell so early, right after the investment.
To a company. How did you convince them? I can imagine, [00:28:00] right. Looking also at the IPO that your competitor made, right. That they're willing to say, you know, that was not, that was not that clear at the time. So, and so there was one company that went IPO and they did really well, and this was never hypoglossal stimulation inspire they're cold.
And so that was completely different technology and a very expensive treatment, but they did a huge IPO and N. Did really well, but that was post our, um, post our acquisition. So I don't think the space and the interest in this space was as clear as it is today at that, at that time. Yeah. So, so, and I think, um, the, the offer that we got was interesting, um, uh, I think everybody felt the momentum.
Um, I'd been working on it for 10 years. Nine years personally, also that you exactly. I just had my second child, I'd given my life 10 or like a third of my life, um, for that. And so for me, it felt right as well. And, um, they did ask if I was open for the, uh, for an IPO. [00:29:00] And that would mean a lot on my shoulders.
Um, as I said, it made much more sense to, uh, to use the, and leverage the work that Phillips had already done than to do everything. To build everything ourselves. Yeah. I think it's really important, right? If a CEO, I think if you, as a CEO, as a founder, believe this is the right moment, right. Or you should be able to convince your investors and other stakeholders, right.
To do that steps that we had to take were really commercial. So we developed the product, we brought it to market, we got FDA approval. Um, we did pivotal clinical trials. We got reimbursement coding, and now it was really the commercial rollout. And that is exactly. You know, if you do an acquisition or you, uh, somebody else would acquire you, that's the first thing that they would let go.
So it really, it really did. Yeah. To me, it didn't make sense in that way. The process that's that that's, that comes next. What's quite invasive, right? Where to hold the diligence team. I heard they flew over from Pittsburgh, go through every single file and the [00:30:00] end and the team was not allowed to. So we ha we had rented, uh, so there was a big space as buildings, just a couple of buildings next to us and the entire team, because if Phillips is, um, uh, it's on the stock exchange, nobody was allowed to know about the acquisition.
So just my, my management team knew about it. And, um, so the entire team was just in the office working every day and we would leave for meetings. Right. And, um, Figure out at one point there might be something going on. Oh no, I was out because I was with pregnancy leave. Um, and, uh, and the management team was out for those meetings.
So, but it was interesting because we had these tables and there would be 10 people on the other side. And then one or two from our side, you know, answering all the questions that they were firing at us. Um, It was very intense, but I think we were well-prepared. Um, and, and, um, the data room was quite fresh because it filled it two years earlier.
Um, and, uh, we added the [00:31:00] latest documentation to that, and then they they're obviously digging through every single detail of it. I was, I remember being really proud of my team because, uh, I had a really strong, um, management team and, and they were, they were really able in much more depth than, than, than they obviously were able to.
Uh, answer any question that was, was, uh, was asked to them. So I think they were quite okay. And I was, at least I was really proud of them when I saw them do their thing. Yeah. Who did the negotiation at that time? Because one it's indeed also, you know, to fail your way, she met all sorts of other terms.
Like it can be an earn-out people want you to stay, et cetera, who did the fight? So we, we did everything with three of us. So my CFO, myself and the chairman of the board, all the three of us. Physically there for, for every negotiation. And then we would, you know, if there were things that we would not deal at at the same time, we would go back to the entire investment board or entire board, basically to talk about [00:32:00] what our position was on.
Um, on specific elements that they'd suggested you had a mandate of the board properly. To say, you can go between this and this, et cetera regarding this. No, because we would, we would agree everything with the entire board and I mean, it's not like you negotiate and then you get a mandate. Um, non-negotiables for you personally.
A non-negotiable so I did not want to, so they had, they had quite a big earn-out that they thought of in the beginning, but, um, I I'd heard so many that stories about that, that I wanted that cart to be as small as possible. Um, so, um, and now I would even say don't know, or not at all, because it just. Um, it's well it's,
well, it's hard because often it's, um, uh, so we did have earn-outs that were managed by us, and those are the good ones, because you can do it yourself. Right. But then there's also. [00:33:00] That have to be performed by the exit party, and then you have nothing to say about it. And then the energy becomes a negative.
And so that second part or not thing I would not do again, but the first part, if you believe in yourself, Yeah, but you, you, your role changes also, right? As a founder, you become less involved. There's a lot of structure, sorry. You're working together with a new parent company. Sorry, the buying company in this case.
Right. So you don't have a lot of influence on the final outcome rights. Yeah. Yeah. Take a city to take us to the moment that you told your team that you were saying. Yeah. So that was to know, right? Because you were in pregnancy leave. You're the rest of the team. We'd, we'd set up a meeting, um, with the entire team like we did every single month.
Um, but that morning we signed. In Amsterdam. Um, we signed, we did the signing and we had the closing and then we drove directly to Delft where the entire [00:34:00] team was waiting for us. And we obviously came with the Phillips people and we had a presentation that we prepared saying, congratulations, uh, balloons, um, the entire thing.
And then. Yeah. So the entire team was there and there was a straight after that followed a program and integration program that was done very nicely by Phillips. They had a team on top of that, that had done this before they knew how to, um, yeah. How to they had an integration plan and, and really let us through that.
So, um, um, but yeah, people felt that something. Going on, but they really had no idea that did they respond because I personally had one time when I was telling to the staff that I sold the company and they were all completely depressed and then they all jumped on the table. Right. And I think the message was more or less the same.
So I think, uh, I did, I think they did not really know what to expect from it. So, uh, uh, They did not know whether to be happy or [00:35:00] not to, or to be sad about it. So obviously stock option pool available. We did have a stock to us stock option pool. Uh, we definitely did have that. Um, but people also felt their jobs.
Right. And, um, especially because the, um, The part of Phillips that did the acquisition was based in Pittsburgh. So how would that, you know, um, everybody got moving. Yeah. So you were allowed to, if you want, I want it to, but most people obviously wanted to stay in the Netherlands. So then, then you have to look for a new job within Phillips in either Amsterdam or, or in, in ain't Hoven.
And that obviously creates a lot of insecurity. So I think it were mixed feelings because of that. Yeah. What was the best advice that you got during that process of selling your company? Because you did it for the first time, right? You have some experience help from your, from your board, uh, chairman of the board, that, what was the best advice you got from another guy or girl or a relative or people, you know, in your surroundings?
Uh, not people [00:36:00] in my surroundings. I was not sharing a lot with anybody at all, uh, to be honest. Uh, but, uh, I was quite afraid. I mean, all these legal obligations and stuff that is putting your shoulders and, and, um, but I remember that my, the chairman of my board mentioned, okay, I've signed these things like six or seven times and yeah.
It looks really harsh, but this is how it actually works out. And I would not worry about this. Whereas if I would read the legals, I like be really afraid of, of what was there. Um, and that really comforted me. I can remember that that really softened me up and I figured, okay. They, they don't have bad intentions here.
I mean, that's not the case. I mean, um, and, uh, I think that really helped me. That helped me, but other advice. Hmm. What did you got for yourself? Most entrepreneurs gift themselves a small presence or a big brother or a big presence. So does he use yachts you bought now? I know. So, um, [00:37:00] I was still driving my, uh, Toyota Yaris I'd had for 20 years.
Um, so I bought, I bought a Tesla. I was really, that was really present to me. Uh, but then, uh, I, um, the, I think the thing that I really figured I wanted to do is create, um, So I, I, uh, I went on a four month travel with my family in the U S and Hawaii. And, um, I really enjoyed that, but I really make it a mission to create special, you know, do special things with, with good friends.
So I took one. To Necker island to go kite surfing. And, um, I'm still challenging my dad to go helicopter skiing with me, but he doesn't think it's cool to do that with his daughter.
no, it's not cool to do that with your daughter. Right. So, um, I have to think of something else there. So. Yeah. So those types of things. Cool. Last thing, [00:38:00] last question. What other, do you have a tip you can share with founders who are now in the process of exiting the company? What's the, um, yeah, so, so. I actually did the exit the same way as I did my fundraising.
So I really hunted, hunted them down. I was in lead of the process. It was my energy that, that pulled everything forward. Uh, it's not that they're the lack of interest on the other side, but it's just, you know, the running business on the other side that keeps people distracted. And unless it's your energy, it's not going to move forward.
Uh, so. Yeah, I was on top of everything I try to over, uh, over-perform on every single question that I got and I try to create competition to really make it, um, yeah. To really make it attractive for people to continue. Yeah, it really is. It really is. And, uh, and it's really your energy. Yeah. And I, I, until the last day, I've been quite surprised about that, that, that the, you [00:39:00] know, really pushing and continuing to, to keep the drive there.
Yeah.
Last, but definitely not least to valuation in May, 2018 Knight balance was acquired by Phillips for an undisclosed amount. For context night, balanced develops a clinically validated positional therapy device that uses vibrations to alter sleeping positions and help prevent sleep apnea. Let's look at other similar acquisitions of medical device companies to get a feel for what they might've been acquired for.
Let's start with German competitors, Soma techs, medical technical. Some attacks for context manufacturer's devices for tumor diagnostics, they were acquired by Hologic for 64 million us dollars in 2021. At the time somewhat texts had around 40 employees almost expected to generate around 13 million revenue in 2020 there's employee count is in the same range as Nike.
Nice balance had around 30 [00:40:00] employees when they required. If we discount the exit valuation of so much text linearly with the number of employees of night balance, the X evaluation of night balance would be around 48 million us dollars or around 39 million euros. Another comparable company that was acquired recently as EndoChoice and no choice was acquired in 2016 for 210 million us dollars.
That is by Boston sign. For context and a choice of manufacturers, devices that treat gastrointestinal disease. At the time that EndoChoice was acquired, they had an annual revenue of about 90 million us dollars and 95 employees doing that same valuation versus employee discounting. As above we would arrive at an exit valuation for night balance of around 66 million us dollars or around 54 million.
The final example we will look at is a us company called intact. Intact vascular was acquired by Phillips in 2020. For [00:41:00] context, they specialize in implantable devices that treat peripheral artery disease. Intact vascular was acquired for 275 million us dollars. And they had already raised a whopping 150 million us dollars as well.
At the time they had around 70 employees, when Phillips bought them using the employee count discounting as above intact vascular would lead me to calculate night balances exited. To be around 94 million euros. However, this estimation seems to be high considering night balanced rates, it considerably lower amount Knight balanced, raised a series B of around 12.5 million euros, or just under $14 million led by in Inkef Capital and glide healthcare partners.
Assuming a 50% dilution in this round, the investment would likely have an exit valuation of 25 million. Combining the above calculations, I would estimate next evaluation of around 40 to 50 million euros for night balance. This would mean a good return around two [00:42:00] X for the investors within two years.
Assuming once again, a dilution of 50% during the investment round of 2016, I love to hear the story. It was really a good story. Um, and I, I can't comment on it. I'm sorry. Um, but I really liked your story. You so much for your time and insights today. And thank you so much for listening to the big exit show brought to you by Peak
If you want to learn from the best tech investors and how they exit their companies. Please subscribe through your favorite podcast channel. And I hope to see you soon at the next episode. [00:43:00] .