2007 1st Half    

In this issue:

New Investments
  • Chrysalis Co-Leads $6 Million Series A in Digitalsmiths
  • Mobile Armor Secures $6 Million Series A Co-Led by Chrysalis

Exits
  • Appriss Secures Strategic Recapitalization From Bain Capital Ventures and JMI Equity
  • MindLeaders Acquired by ThirdForce Plc. for $18 Million

Follow-On Financings
  • ConnectivHealth Raises $2.1 Million Following Relegent Acquisition
  • Intechra Raises $30 Million, Adds National Logistics Network and Two Acquisitions
  • Cybera Expands Offering to $18 Million
  • Ygnition Raises $20 Million in Debt Capital, Acquires Florida Systems

New Developments
  • Richard Vance Named Operating Partner
  • Dave Wilkins Joins as Executive-in-Residence
  • David Parento Promoted to Senior Associate
  • Elizabeth Rounsavall Joins as Associate
  • Lenny Grover and Juliya Litichevskaya Join as Analysts

In Memoriam
  • Douglas R. Carlisle


New Investments

Chrysalis Co-Leads $6 Million Series A in Digitalsmiths

In June 2007, Chrysalis and Durham, NC-based The Aurora Funds co-led the initial $6 million equity financing of Digitalsmiths Corporation, a digital video asset management technology company based in Raleigh-Durham, NC.

Founded in 1998, Digitalsmiths is the creator of VideoSense™, the first platform-agnostic broadband video contextual advertising solution. Digitalsmiths enables video content owners to make their video both more accessible and more valuable. The company's technology indexes video efficiently, allowing it to be searched based on spoken word and video content, while serving advertising relevant to the content. Digitalsmiths also developed InScene, the automated video indexing technology used by motion picture and television studios to digitize feature films and television series and make them easily searchable.

Chrysalis Principal Wright Steenrod has joined Digitalsmiths' board of directors.

Please click here to view the complete press release.



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Mobile Armor Secures $6 Million Series A Co-Led by Chrysalis

In June 2007, Chrysalis and New York-based Dolphin Equity Partners co-led a $6.0 million Series A investment in St. Louis-based Mobile Armor, LLC, a managed services provider of Enterprise Mobile Data Security (EMDS).

Mobile Armor's solutions help companies protect against data losses or privacy breaches that result when employees lose laptops, PDAs, cell phones, or other sensitive devices through mistake or theft. The company's technology seamlessly integrates across different operating systems including Microsoft Windows, Linux, Blackberry, Palm OS, and Microsoft Windows Mobile, enabling government and enterprises to protect fully their mobile assets while ensuring consistency, integrity, and availability of critical data.

Mobile Armor's solution has been certified and validated to meet the security standards set by the National Institute of Standards and Technology (NIST), an agency of the United States Government with customers including the Supreme Court of the United States and the United States Department of Defense.

Chrysalis Managing Director Bob Saunders has joined Mobile Armor's board of directors.

Please click here to view the complete press release.



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Exits

Appriss Secures Strategic Recapitalization From Bain Capital Ventures and JMI Equity

In July 2007, Appriss Inc., the leading provider of innovative technology solutions that assist law enforcement efforts and improve the efficiency and effectiveness of criminal justice agencies, announced a strategic investment from Bain Capital Ventures and JMI Equity to recapitalize the company. While the company has not disclosed specifics, Chrysalis and other early investors were pleased with the terms of the recapitalization.

Chrysalis seeded and nurtured Louisville-based Appriss beginning in March 1995 when founders Mike Davis and Yung Nguyen approached Chrysalis for both seed capital and guidance in building a business around their innovative victim notification technology. Chrysalis and co-investor Windcrest Partners financed the development and distribution of the company's patented VINE® service, the nation's leading victim information and notification service which is currently available in more than 2,000 criminal justice agencies in 41 states and the District of Columbia, enabling jails and prisons to notify crime victims when perpetrators are being released from custody. Co-investors Mayfair Capital, Richland Ventures, and CID Equity Partners later provided additional capital to fuel the company's expansion and new product innovation.

In recent years, Appriss has expanded its offerings to include other software-based services. All company applications are delivered on a hosted SaaS model, allowing law enforcement and criminal justice agencies to implement solutions quickly, efficiently, and inexpensively.

Doug Cobb, Chrysalis co-founder and then managing director, chaired the company's board from inception, and joined Appriss as CEO in 2000. Chrysalis' earliest fund exited Appriss as a result of this recapitalization while Chrysalis' second fund retained a portion of its investment in the company. According to Chrysalis Managing Director David Jones, Jr., "This exciting strategic investment from Bain and JMI positions the company for continued rapid growth, and we are excited about Appriss' future success."

Please click here to view Business First of Louisville's coverage of this recapitalization.



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MindLeaders Acquired by ThirdForce Plc. for $18 Million

In May 2007, Dublin, OH-based MindLeaders Inc., a leading provider of e-learning and employee development solutions, was acquired by ThirdForce Plc. (London AIM: THF and Irish Stock Exchange: QPO.IR) for $18 million. ThirdForce is a leading provider of e-learning solutions and services to the education, government, hospitality, healthcare, and commercial sectors in the UK, Ireland, the Middle East, and Australia. MindLeaders is ThirdForce's fourth acquisition in four years.

Please click here to view the complete press release.

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Follow-On Financings

ConnectivHealth Raises $2.1 Million Following Relegent Acquisition

In July 2007, Nashville-based ConnectivHealth (formerly FWI, Inc.), a healthcare information company, raised $2.1 million to accelerate its expansion in the national healthcare digital media space. The financing followed ConnectivHealth's June acquisition of Nashville-based Relegent, a provider of online healthcare information to the hospital and education industries. The ConnectivHealth network now includes VerusMed, which delivers editorially independent clinical news briefs to more than 150,000 physicians; HealthTeacher, which provides K-12 health curriculum online to more than 7,000 schools; and Discovery Hospital, offering consumer health content via more than 150 hospital websites in partnership with Discovery Communications Inc.

Chrysalis, along with original investors Petra Capital Partners and the company's President and CEO Scott McQuigg, participated in the financing as did additional members of the management team. Chrysalis co-led the $5 million Series A round of financing in 2005 for FWI, Inc. and Managing Director Koleman Karleski serves on the company's board of directors.

Please click here to view the complete press release.

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Intechra Raises $30 Million, Adds National Logistics Network and Two Acquisitions

In May 2007, Jackson, MI-based Intechra Holding Corp., the largest and fastest growing electronics lifecycle management (ELM) company in the United States, raised $30 million led by Richland Ventures of Nashville, Oxford Bioscience Partners of Boston, and First Avenue Partners of Nashville. Chrysalis was a co-investor in the financing along with Sewanee Partners and SJF Ventures.

In July, the company launched a national logistics network and completed two acquisitions: Lifecycle Partners, with operations in New Hampshire and North Carolina, and BCS Logistics, a transportation company based in Dallas. These acquisitions are Intechra's fifth and sixth acquisitions since November 2006, bringing the company's revenues to more than $100 million per year. Intechra's in-house logistics network will offer clients a single, secure chain of custody for their IT assets, providing an audit trail for compliance with data security and environmental laws. The logistics network will be operational nationally by the end of third quarter.

Intechra is the only fully integrated ELM provider with a national footprint covering every region of the country. With the latest acquisitions, Intechra has plants which can remanufacture and remarket more than 350,000 retired IT assets per month, including computers, monitors, laptops, routers, and servers. The company's recycling centers can recycle eight million pounds of electronics per month.

Chrysalis led the company's $4 million Series B financing in August 2005, and participated in its $12 million follow-on round in December 2005 and its $30 million Series C in January 2007. Chrysalis Managing Director David Jones, Jr. serves on Intechra's board of directors.

Please click here to view related press releases.



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Cybera Expands Offering to $18 Million

In April 2007, Nashville, TN-based Cybera Inc., a provider of high-speed, private networking solutions for business needs, expanded its Series C round of funding to $18 million. This round of financing was led by Adams Street Partners of Chicago with Chrysalis, Claritas Capital LLC of Nashville, and several prior Cybera investors also participating.

Cybera delivers next generation broadband wide area network solutions to multi-location businesses across the United States. Target market segments include the restaurant, convenience store, specialty retail, healthcare, and financial services industries where advanced networking technology supports enterprise applications. The company plans to use the new funding to add new service features, and further intensify sales and marketing efforts to address the growing demand in its target markets.

Chrysalis participated in Cybera's initial $12.8 million Series C in January 2006, and Principal Wright Steenrod serves on the company's board of directors.

Please click here to view the complete press release.

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Ygnition Raises $20 Million in Debt Capital, Acquires Florida Systems

In March 2007, Seattle-based Ygnition Networks, Inc., a leading provider of Video, Internet, and Voice services to the multi-family real estate industry, closed a $20 million senior secured revolving credit facility provided by Full Circle Capital and FCC, LLC (First Capital).

Ygnition provides broadband services to over 150,000 apartment units throughout the United States. In May, the company acquired six private cable systems in Florida market from Park Square Enterprises and Prime Time Broadband, a wholly-owned subsidiary of AIMS Worldwide (OTC BB AMWW).

Chrysalis led the company's $5 million Series B round in July 2003 and participated in its $7.5 million Series C round in April 2004. Chrysalis Managing Director Bob Saunders serves on the company's board of directors.

Please click here to view the complete press release.

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New Developments

Richard Vance Named Operating Partner

In August 2007, Chrysalis Executive-in-Residence Richard Vance joined the firm as Operating Partner. In this new role, the former CEO and President of CorSolutions Medical, Inc. will evaluate new business opportunities in the healthcare services and technology sector, assist current portfolio companies within this sector, and serve on the board of directors for select Chrysalis investments.

Richard has over 20 years of experience in healthcare analytics and modeling, health services research, product development, and healthcare IT, and has published more than 80 articles in national and industry publications. He was CEO and President of CorSolutions from 2001 to 2005, the nation's second largest disease management company until it was acquired by Matria Healthcare. In 2004, Richard was recognized as one of the top 10 disease management executives by Managed Healthcare Magazine. Previously, he held leadership positions at Humana and at Wake Forest University Medical Center.

Richard holds a BA from Wake Forest University, an MA from University of Chicago, and a MD from Wake Forest University.


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Dave Wilkins Joins as Executive-in-Residence

In July 2007, Dave Wilkins, former Chairman and CEO of Louisville-based Doe Anderson, the fifth oldest advertising agency in the country, joined Chrysalis as Executive-in-Residence. In this role, Dave will evaluate new business opportunities in the media and communications sector, and assist current portfolio companies with their branding and marketing efforts.

Dave has over 30 years of managerial and leadership experience, most recently serving as Doe Anderson's CEO for 14 years. While at Doe, he led the agency's growth from $34 million in 1980 to $110 million in 2007 by expanding Doe's presence in regional and national markets with the addition of national and international clients including Maker's Mark and Kohler. Dave also directed the agency's expanded use of technology, and integrated the new disciplines of account planning, direct marketing, design, and channel marketing.

Before starting into his business career, Dave spent eight years in the US Army and left active duty with the rank of Captain. Dave holds a BA from Puget Sound University.


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David Parento Promoted to Senior Associate

In August 2007, Chrysalis Associate David Parento was promoted to Senior Associate. In this role, David will provide analytical and transactional support to the investment team.

Prior to joining Chrysalis in August 2006, David was an Associate at Davis Polk & Wardwell in Menlo Park where he worked on M&A, recapitalization and restructuring, private equity, and capital market transactions. He holds a BA from Yale University, a JD from Vermont Law School, and a MSc in Management from the Stanford Graduate School of Business, where he was a Sloan Fellow.

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Elizabeth Rounsavall Joins as Associate

Elizabeth Rounsavall joined Chrysalis as an Associate in August 2007. She provides analytical and transactional support for Chrysalis' three primary investment sectors: healthcare services and technology, media and communications, and business services.

Prior to Chrysalis, Elizabeth worked for Booz Allen Hamilton in New York, NY as a Senior Associate where she led project teams in delivering financial and economic research, analysis, and recommendations for clients across a variety of industries including media and communications, banking, and insurance. Previously, she worked for Macmillan/McGraw-Hill as a Technical Consultant and for Simon & Schuster as Manager of Intranet Services.

Elizabeth has a BA from Yale University and an MBA from MIT's Sloan School of Management.

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Lenny Grover and Juliya Litichevskaya Join as Analysts

In July 2007, Lenny Grover and Juliya Litichevskaya joined Chrysalis as Analysts.

Prior to Chrysalis, Lenny was the founder of New Media Properties in Silver Spring, MD where he developed and marketed an advanced contextual advertising software application. He most recently was a senior automation analyst for Corporate Executive Board Solutions in Washington, D.C. where he performed strategic data analysis to support management consultant engagements. Lenny earned a BSE from Cornell University where he majored in Computer Sciences with a specialization in Management.

A native of Newark, NJ, Juliya earned a BA in Economics and Russian Literature from Yale University in June 2007. She most recently interned for the U.S. Department of State where she researched, interpreted, and analyzed historical documents in Russian and Serbo-Croatian for the investigation and prosecution of human-rights violators residing in the U.S. Also during college, she interned for the New Haven Mayor's Office where she worked on policy research and various energy and youth initiatives.


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In Memoriam

Douglas R. Carlisle

Doug Carlisle, 57, a former healthcare executive and valued Executive-in-Residence for Chrysalis, died quietly July 29, 2007 at his home in Anchorage, KY after an 18-month battle with multiple myeloma.

With over 20 years of leadership experience in the healthcare industry, Doug joined Chrysalis in April 2005 as Executive-in-Residence, helping evaluate new business opportunities in this sector as well as assisting current portfolio companies. Previously, he was the Senior Vice President responsible for the Senior Product segment of Humana Inc. Humana is one of the largest Medicare Advantage contractors in the United States and the largest Medicare Advantage contractor in Florida, Chicago, and several other markets around the country.

"Doug's colleagues at Chrysalis mourn his passing, even as we celebrate the time he chose to spend with us," said David Jones, Jr., Chrysalis chairman and managing director. "We learned so much from Doug - from both his deep experience, and from his wonderful spirit."

Please click here to visit the beautiful obituary drafted by Doug's family and friends.



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