Hylas to close due to lack of investors
By Jeff Kiger
Citing a "brutal economy," a start-up technology company that Rochester leaders had high hopes for has decided to close operations.
"We know we have a great idea and a great business concept, but the economy is just brutal," said Dale Crist, co-founder of Hylas Inc.
Crist started Hylas with Rick Olmsted last summer with a plan to create a device to be worn by seniors that would remotely track their movements and whether they had fallen.
The company had developed a working prototype and its investors included Mayo Clinic and Rochester Area Economic Development Inc.
Mayo did not invest money, only time and effort, said Kathy Anderson, a Mayo Clinic spokesman.
It also has been approved for JOBZ tax breaks, but Hylas officials held off signing the contract knowing the company’s situation.
Hylas was touted as an example of Rochester’s future economy and Gov. Tim Pawlenty toured the company in November.
"To get to the next step, we needed roughly $1 million," Crist says. "During the past four months we probably made 100 presentations (to potential investors). But we couldn’t get it done."
Now Crist and Olmsted are closing their northwest Rochester office, where five people were working. They are trying to decide whether to sell the intellectual property they created or hold on to it until the economy improves.
Due to the nation’s economic situation, venture capital organizations that invest in early stage development are "being very careful," Crist said. Many groups said they were interested in investing, after the company moved closer to getting a product to market.
The fact that Hylas did not fit snugly into the medical device category or the information technology category also hurt the company’s chances for funding, says RAEDI President Gary Smith.
"They are right smack dab in the middle. It is new territory. There aren’t organized V.C. funds that have developed an appetite for looking at those type of investments," he says. "It is unfortunate, but it appears they are a victim of being ahead of the game."
While Smith declined to discuss how much money RAEDI had invested in the company, he did clarify that none of it came from tax dollars. It was from a RAEDI fund of private money.
"I personally think their technology was good and they were on the right track," he said. "Like anyone else, we don’t like to lose money. The purpose of this kind of fund is to take that kind of risk."
Beside Hylas, RAEDI has recently invested in or is starting to invest in three similar companies.
Smith says he expects the number of startup companies in Rochester to increase. He hopes more early-stage investment money will be available to them.