Number Crunchers

Here at Chrysalis, we love us some data. Venture investing isn’t all about “trusting the gut” after reading through a business plan or listening to an elevator pitch, when deciding whether to partner with an entrepreneur. A considerable amount of time is spent by a venture capitalist in the due diligence process — crunching industry, geographic and economic data; and speaking with current and former employees to make sure the decision to fund is in the best interest of our limited partners. All VCs win some and lose some….but it isn’t because we don’t crunch the numbers. The risk we take to fund a company is calculated and measured.

Each year, Inc Magazine comes out with the “Inc 5000”, a list of America’s fastest growing companies. They slice and dice the data and rank companies by industries, geography, and revenue. As healthcare and technology investors in the Midwest and South, here are a few of our takeaways:

1.The healthcare startup ecosystem is strong and continues to innovate.

Of the 377 healthcare companies on the list, the aggregate growth rate of these companies between 2008 – 2011 was 61%. Of the 25 industry categories, healthcare outperformed 10 other industries.

2. Entrepreneurs have many choices when looking for outside capital. Many entrepreneurs who take venture capital are looking for a growth partner not just cash.

 Of these 377 companies, about 21% of them are now or have ever been venture or private equity-backed.

3.Innovation happens between the coasts. Startups aren’t only hatched and grown in California, Boston and New York.

 66% of healthcare companies in the Inc 5000 are in non-coastal regions (e.g., including Southeast, Midwest, North Central, Texas, Southwest, South Central, Upstate NYC, Northwest and Colorado)

 62% of aggregate revenues of healthcare companies in the Inc 5000 are in non-coastal regions (e.g., including Southeast, Midwest, North Central, Texas, Southwest, South Central, Upstate NYC, Northwest and Colorado)