Chrysalis Ventures
2010 3rd Quarter Newsletter www.chrysalisventures.com
 

Investing in Information

Many of our investments at Chrysalis focus on information, how it is accumulated and how it can be used. We value businesses that organize information and create personalized, interactive and connected information products and services that are valuable to businesses or individuals.

The information value chain has been a historically rich vein for venture investing and is one in which Chrysalis has a strong 17-year track record of monetizing information. Expressions of this approach have included investments in the following companies… read more »

   

Chrysalis in the News


Below please find a few links to recent articles about Chrysalis and our team:

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

Chrysalis Plans Georgia Expansion As Part Of New Hires

Chrysalis Ventures Looks for Cost-savvy Healthcare Companies

VCs Weigh Pros and Cons of Health Care

David Jones | Creating Jobs in an Innovation Economy

Meet the Manager – At the Speed of Information

Entrepreneur’s Helper

Chrysalis Ventures Discovers Investment Winner in the Heart of Detroit

 

Investing in Information

Many of our investments at Chrysalis focus on information, how it is accumulated and how it can be used. We value businesses that organize information and create personalized, interactive and connected information products and services that are valuable to businesses or individuals.

The information value chain has been a historically rich vein for venture investing and is one in which Chrysalis has a strong 17-year track record of monetizing information. Expressions of this approach have included investments in the following companies:

  • HealthMedia - which collects personal information to develop highly tailored coaching programs to help individuals lose weight, stop smoking, eat better and manage their chronic diseases
  • Genscape - which aggregates proprietary energy information that is highly relevant to a specific niche of businesses
  • Digitalsmiths - which provides video indexing technology that enables large movie studios to more effectively inventory and monetize their media content
  • Continuum - which owns wireless spectrum that serves as the raw material to deliver broadband data over wireless networks

To complement our investment team, we have assembled a deeply experienced team of venture partners and entrepreneurs-in-residence (EIRs) to provide Chrysalis unique insight into how data is and can be used to better understand, target and sell potential customers.

Chrysalis co-founder Doug Cobb, who recently returned to Chrysalis as an EIR, became CEO of Appriss, a Chrysalis portfolio company, in 2000. Appriss aggregates arrest record information from county jails across the country and uses that information to provide innovative software-based services that help local, state and federal criminal justice agencies serve and protect their citizens. Assembling valuable information and efficiently targeting a customer base will continue to be core to many of Chrysalis’ technology investments.

Doug started his first company, the Cobb Group, at the dawn of the personal computer age to provide consumer guidance about how to use first-generation consumer software. The Cobb Group aggregated and edited inexpensive content which was packaged in a newsletter and sold via a subscription to consumers for both personal and professional use. Doug’s three decades of experience with different customer acquisition and data aggregation models make him a unique and invaluable resource.

As our new Venture Partner based in Houston, Alan Ying has brought tremendous expertise to Chrysalis since joining the team in May 2010. Having successfully built and sold a healthcare IT company to Thomson Reuters, where he stayed as CMO for several years, Alan understands how the personalization of data is transforming medicine and the strategies of large information services providers.

 

Janesse (Jan) Thaw Bruce, who joined Chrysalis as a Boston-based EIR in March 2010, helps Chrysalis understand the opportunities created as established media companies wrestle with the digital transition of their business. Most recently Jan was Managing Director at Martha Stewart Living Omnimedia, where she ran body+soul magazine, the category leader in wellness and sustainability, and was responsible for the launch of WholeLiving.com, a site leveraging mind, body, spirit, wellness and “green” subject matter.

 

Based in Atlanta, Greg Foster joined Chrysalis as an EIR in May 2010, bringing a diverse entrepreneurial and executive background in media and technology. Greg was founder and CEO of Southern Direct, an e-commerce platform provider for cable networks, which he sold to Turner Broadcasting. At Turner, he oversaw M&A and investment opportunities for all of Turner’s brands including CNN, TNT, TBS, TCM, Cartoon Network, TruTV and Adult Swim. Greg has a deep understanding of how large media companies are using technology solutions to better organize and monetize content through a variety of marketing strategies.

Collectively, this assemblage of talent provides Chrysalis with experience based insight into how to “connect the dots” and help our entrepreneurs and their customers make better decisions in a world awash in information.

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New Investments

StraighterLine Raises Initial Funding

In January 2010, Chrysalis invested in the Series A financing of Alexandria, Virginia-based StraighterLine, a low-cost provider of online general education courses to college students. Former Chrysalis Senior Associate David Parento joined the company as COO-CFO in late 2009.

StraighterLine’s innovative and disruptive business model greatly improves the affordability and accessibility of education by removing significant cost barriers to quality education. The company offers entry-level required college coursework, the courses that must be completed prior to starting a major, online for a $99/month subscription fee. Once finished with preliminary required courses, students then transfer credits through the company’s partner institutions to a school of their choice where they finish the more specialized portions of their degrees.

View the complete press release here.

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Select Follow-on Financings

Chrysalis has had an active first half of the year with 13 follow-on financings in 10 companies including the following highlights:

Chronicity Raises Another $3 Million

In June 2010, Chrysalis led the $3 million follow-on financing of Dallas-based Chronicity, a provider of integrative, retail clinical services for chronic health conditions. The company currently focuses on Fibromyalgia and Chronic Fatigue disorders that afflict an estimated 5 – 10 million people in the U.S.

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CerviLenz Secures Additional $3 Million

In 2010, Chrysalis participated in the $3 million follow-on financing of Cleveland, Ohio-based CerviLenz along with co-investor Arboretum Ventures. The company also announced in May the availability of its innovative CerviLenz® tool for pre-term labor triage during the American College of Obstetricians and Gynecologists (ACOG) Annual Clinical Meeting. The patented, FDA-approved device inexpensively and accurately measures cervical length to determine whether delivery is imminent and what level of care is required, thus reducing costs and improving patient care.

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Foundation Radiology Group Secures Additional $6 Million

In February 2010, Chrysalis participated in the $6 million follow-on financing of Pittsburgh-based Foundation Radiology Group. Foundation Radiology Group provides diagnostic imaging professional services to hospitals, outpatient imaging centers, urgent care centers and long-term acute care institutions. The company's hybrid, outsourced model offers superior service at the lowest cost for hospitals by combining on-site radiologists and off-site domestic teleradiologists. In July 2010, Foundation Radiology Group was named one of Pittsburgh's Top 100 fastest growing, privately-held companies by the Pittsburgh Business Times, based on three-year, compounded revenue growth.

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Regent Education Raises Another $1 Million

In early 2010, Chrysalis was the sole investor in the $1 million follow-on financing of Frederick, Maryland-based Regent Education, a provider of financial aid management solutions to higher-education institutions. The company leverages technology and automation to improve the operational efficiencies of the financial aid office in the face of regulatory compliance concerns, growth in demand for student loans and increasing competition for students.

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Portfolio Company News

Chrysalis portfolio companies continue to deliver exciting news on the strategic front. Select highlights include:

Connecture Acquires Insurint

In March 2010, Atlanta-based Connecture, a provider of integrated web-based sales and service automation solutions for the health insurance industry, acquired Insurint, a subsidiary of HealthBenefitsDirect, Inc. (OTCL HBDC) and a leader in broker sales automation. Now the largest end-to-end sales automation provider in the health insurance market, the company offers straight-through processing from lead management to quoting and application through to enrollment and post-sale management.

In digitalizing what traditionally have been complex and paper-bound processes, Connecture’s solutions enhance productivity and help insurers lower costs for their members and customers. The combined entity serves more than half of the nation’s leading insurance carriers including many Blue Cross Blue Shield carriers, WellPoint, Kaiser, United Healthcare, Humana One and Assurant Health, and has relationships with over 80 health insurer customers who reach over 50,000 insurance agents.

View the complete press release here.

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Digitalsmiths Expands Senior Management Team and Board

In June 2010, Gregory Hodges, former president of iBHAN, Inc., and Roger Lynch, most recently executive vice president of advanced technologies at Dish Network and EchoStar Corporation, joined Digitalsmiths as chief operating officer and new member of the board of directors, respectively. These veteran professionals bring a combined 40 years of team management experience to help drive Digitalsmiths’ financial growth and help further the company’s strategic development and operations.

Both individuals have a proven track record of growing companies, and a keen understanding of the vastly changing digital entertainment landscape. At iBHAN, Gregg was responsible for operations management, providing IP platform based entertainment solutions and high speed Internet solutions for hotel industry guests and meeting attendees in more than 30 countries. During his six plus years at iBAHN (formerly STSN), the company was recognized as being one of the fastest growing privately held companies in North America by Inc. Magazine. At Dish Network and EchoStar Corporation, which specializes in creating hardware and service solutions for cable, telco, IPTV and satellite TV companies worldwide, Roger was responsible for the development and deployment of new technologies and services utilizing IP technology.

Digitalsmiths is creating the next generation video library to track and monetize premium video content. The company’s flagship product, VideoSense®, powers digital media analytics for today’s leading Hollywood studios, broadcasters, distributors and publishers including Warner Bros., Telepictures and TMZ.com.

View the complete press release here.

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Entrepreneur Profiles

Dave Conway, President & CEO of iSqFt/Construction Software Technologies

Dave Conway founded iSqFt, the market leader in online construction information for the commercial and industrial construction markets, in 1993.

Since founding iSqFt, Dave has led the company through significant growth, both through acquisitions as well as organic growth in new products and markets. Together with his senior leadership team, he has transformed the company from a provider of niche blueprint analysis software into a comprehensive software-as-a-service preconstruction management platform. Since Chrysalis's investment, the company's subscription base and revenues have both increased by over 10x.

Dave has a bachelor's degree in marketing from the University of Dayton. In June 2005, Dave was the recipient of the Ernst & Young Entrepreneur of the Year award in the South Central Ohio and Kentucky region in the Technology Category.

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Jay Mason, Founder, President & CEO, My Health Direct

Jay Mason is the founding CEO of My Health Direct, a provider of web-based scheduling solutions to the healthcare industry. My Health Direct’s software platform enables users to search for, compare features of, and schedule appointments with healthcare providers throughout an entire community or network.

A serial entrepreneur, Jay launched National Employee Benefits in 1988, one of the first chiropractic benefit management firms in the country, which merged with American WholeHealth (AWH) in 1998. After the merger, Jay served as CEO of AWH’s managed care division; in 2005 AXIA Health Management bought AWH – then comprised entirely of Jay’s former company – resulting in a 10x return to the company’s venture investors.

In 2007, Jay co-founded My Health Direct. Since then, he has led the expansion of the company’s solution from a relatively-simple tool designed to get non-emergent patients out of the emergency room to a sophisticated “inventory management” system applicable to a broad array of healthcare enterprises. With healthcare reform poised to add patients to an already-crowded system, we believe a tool like My Health Direct that can manage increasingly scarce care resources will have significant value, similar to the way OpenTable’s reservation system became the “must have” scheduling platform in the restaurant industry.

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Other Chrysalis News

As Wright highlighted above, Chrysalis continues to grow, deepening its bench strength and expanding its geographic footprint. Additional team news includes:

Wendy Jarchow Joins as Director of Business Development

In March 2010, Wendy Jarchow joined the team as Director of Business Development based in the Cleveland office, supporting Chrysalis’ business development efforts throughout the Upper Midwest. Prior to joining Chrysalis, Wendy spent 14 years in the financial services industry in both Chicago and Cleveland. In June 2010, Wendy was appointed to the Ohio Venture Association (OVA) Board of Trustees.

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Derek Fricke Joins as Analyst

Derek Fricke joined Chrysalis as Analyst in May 2010, having worked most recently as an Associate for BIA Digital Partners, a Washington DC-area private equity and mezzanine investment fund where he participated in investments in media, communications and online services companies. Previously, he was an Analyst for SunTrust Robinson Humphrey in Atlanta.

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About Chrysalis Ventures

Chrysalis Ventures manages one of Mid-America’s largest funds for early-stage and growth investments with approximately $400 million under management. Since 1993, the firm has invested in over 65 companies, primarily in the Healthcare and Technology sectors. With headquarters in Louisville, Kentucky, Chrysalis has offices in Cleveland, Pittsburgh, Ann Arbor and Houston. The firm seeks to partner with entrepreneurs to build enduring businesses in industries undergoing significant transformation.

Please let us know if you are aware of a company that might be a strong investment fit. We are always looking for the next great investment and hope you will approach us first with any ideas. Contact us at info@chrysalisventures.com or learn more about our team by visiting www.chrysalisventures.com.

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