Chrysalis Ventures Delivers Dose of Kentucky Funding to Houston’s Health Care, Tech Sectors

Houston Business Journal, May 14, 2010, by Christine Hall

A Kentucky venture capital and private equity firm has entered Houston to check out the investment climate for health care and technology start-up companies.

Louisville-based Chrysalis Ventures has brought aboard Alan Ying as venture partner to head the firm’s new Houston office.

Ying started off as a surgery resident at Duke University Medical Center, and later co-founded MercuryMD Inc. He sold the health care software company to Thomson Reuters in 2006.

For the past couple of years, Ying says he has been active in Houston, managing investments in health care information technology companies.

“There are a lot of deals getting passed off, so I believe there is room for us here,” says Ying.

Chrysalis Ventures, founded in 1993, makes early-stage and growth investments in Midwest and Southwest companies that focus on health care information technology, software and Web-based work.

Chrysalis manages $400 million through four funds, and has a total of 23 employees in Louisville, Cleveland, Pittsburgh and Ann Arbor, Mich.

In addition to Houston, the company recently brought on entrepreneurs-in-residence in both Atlanta and Boston.

Koleman Karleski, managing director, says Chrysalis sees Houston as “under-ventured” in the area of health care technology.

“We think that will lead us to some exciting young companies,” says Karleski.

There appears to be plenty of upside potential. Figures from DowJones VentureSource show there have only been two investments for a total of $4.5 million in local health care companies over the past two years.

Chrysalis is also banking on previous investments in Houston companies. In 2004, the firm invested less than $1 million in MedServe Inc., a medical waste management firm that was purchased by competitor Stericycle Inc. in 2009.

Earlier this month, certain MedServe assets were bought by Houston-based Waste Management Inc.

Darl Petty, president of the Houston Private Equity Association, says Chrysalis has chosen a good time to open an office in Houston.

He notes health care technology has become a growth area due to the push by the federal government to expand electronic medical records and keep health care costs down.

“Houston has always been health care-centric with the Texas Medical Center, but now that we are getting more and more on the technology side, it will be good for them to have a presence,” says Petty.

With an economy on the mend, health care technology companies in need of venture capital could see more companies like Chrysalis coming to town.

In the past 90 days, Petty says equity firms have started to invest more freely and are even competing for deals.

“A lot more money is available now, and that is a good sign,” says Petty.

Chrysalis Ventures

Headquarters: Louisville, Ky.

Other offices: Houston, Cleveland, Pittsburgh and Ann Arbor, Mich.; Entrepreneurs-in-residence in Atlanta and Boston

Money under management: $400 million

Head of Houston office: Alan Ying, venture partner

Location: 2800 Post Oak Blvd, Suite 5850