Michigan Growth Capital Symposium, February 10, 2010
Imagine if the popular television show American Idol limited its talent search to the East and West coasts. From Oklahoma native Carrie Underwood to Texas born singer Kelly Clarkson, none of the nine Idol winners would have been able to compete. In the world of venture capital, the investment talent search is largely concentrated on the coasts. Founded in 1993, Chrysalis Ventures saw an opportunity in the neglected Midwest to build great businesses in the healthcare and technology sectors. In 2003, Chrysalis discovered one of its investment winners in the heart of Detroit.
Chrysalis Managing Director Koleman Karleski remembers the day he met the founders of Asterand, an exciting new start-up located near the Wayne State University campus. Asterand had developed an innovative approach to supplying human tissue samples to drug discovery researchers. “Chrysalis has a long history of identifying young companies that have exciting new technologies that enable the transformation in given industries, and in this particular case healthcare,” said Karleski. “The idea of making the identification, collection and distribution of unique tissue samples from around the world to empower researchers in universities and pharmaceutical companies to do their research more effectively was a compelling idea to us. We don’t have to be scientists, we don’t have to understand the science behind the research, but we can provide the picks and shovels for the miners in this case to do their work more effectively.”
The picks and shovels amounted to a major capital investment that’s starting to pay off. After a merger with Pharmagene, a drug discovery research firm in England, Asterand was awarded the best performing stock on the London Stock Exchange in 2008. Another Michigan winner with a substantial Chrysalis investment is HealthMedia, a wellness and prevention information-based platform founded in partnership with the University of Michigan and sold to Johnson & Johnson in 2008. Koleman Karleski calls the deal one of the best venture-backed exits of the year, and it energizes its team of Ann Arbor-based investment specialists on the lookout for new opportunities in the region. “Michigan is one example of a state that I view as under ventured, meaning that the amount of venture capital available to exciting young companies is relatively low compared to the coasts,” said Karleski, “but Michigan is full of creative, smart people, a great university system, and economic development programs that were put together in a coherent way. We’ve had two big successes in Michigan now and those successes are what keep us coming back for more. We believe you can build good, valuable businesses in Michigan.”