Technology: Bits & Bytes

Saturday, April 22, 2006
By Corilyn Shropshire, Pittsburgh Post-Gazette

MedSage Technologies, the software firm led by Jerry Connelly, has landed $773,500 from a string of private investors -- known in the industry as "angels" -- including some second-time investors from local group BlueTree Capital.

Former Pittsburgh Life Sciences Greenhouse Executive-in-Residence Dennis Metheny has joined MedSage's board, along with David Osterhaus and Blue Tree investor Don Wagner.

The money will be used as working capital to help the firm broaden its product offering and customer base, said Mr. Connelly, who moonlights as a local "angel" investor. MedSage develops software to assist home health care providers monitor and serve their patients.

MedSage is an example of a local firm that won't be seeking venture capital dollars anytime soon, and like at least half of it's brethren assisted by tech support group Innovation Works, will rely on "angels" or other wealthy individuals or groups to fuel it with cash to grow.

Mr. Connelly said the firm doesn't need the $1 million-plus that venture capitalists typically invest in startups and doesn't want to relinquish the management control that venture capital firms sometimes require. "They won't put in $1.5 million for nothing, they'll want both equity and control -- a board seat." As an investor, Mr. Connelly added that makes sense -- he typically requires the same before writing a check. But for a company "that wants to keep ownership and control," he said, "there's an upside and downside.".