Chrysalis, Meritus invest $2.5 million in SinglePipe Communications.

Venture Fund Deal Shows That High-Tech Investments Can Occur in Rural Areas

LONDON, Ky. -- Chrysalis Ventures and Meritus Ventures today announced a deal to invest $2.5 million in SinglePipe Communications, a fully-integrated facilities-based wholesale communications provider of Voice over Internet Protocol (VoIP) services.

The $2.5 million investment -- $1.5 million from Chrysalis and $1 million from Meritus - will allow the company to accelerate the roll-out of its services, primarily to rural communities in the southeastern United States, and provide feature rich, wholesale VoIP services across its own network to underserved rural areas that currently have little or no access to those services.

"We are thrilled to welcome Meritus to our investor group. The rural focus of Meritus Ventures fits perfectly with SinglePipe's focus on providing the latest voice technology to underserved rural areas in the southeast," said SinglePipe President/CEO Matt Phillips.

SinglePipe provides turnkey VoIP services to local telephone companies, Internet service providers, rural cable television providers, and other information technology service providers. As a result, these companies are able to provide the latest voice technology to rural small- and medium-sized business customers and residential customers.

SinglePipe's existing private network allows it to provide wholesale local telephone service at a lower cost compared to traditional voice options, as well as to offer the rapid and cost-effective introduction of new features and services at no additional cost to its wholesale providers who in turn can pass those savings on to their rural customer base.

"SinglePipe is off to a great start and we are pleased to participate in this follow-on round of growth capital," said Wright Steenrod, principal of Chrysalis Ventures and member of the SinglePipe board of directors. "Meritus Ventures is an experienced partner. We are excited they have chosen to invest in the SinglePipe team."

Model for attracting high-tech investments, jobs

In addition to assisting SinglePipe and bringing much-needed, competitively priced, high-tech communications services to rural areas, Meritus believes investments such as this one can become a conduit for traditional private equity into rural America.

"We want everyone to recognize that high-tech businesses can be created and flourish in rural areas," said L. Ray Moncrief, Meritus Ventures Fund Manager. "As the first and only Rural Business Investment Company in the United States, Meritus is proving that quality private equity transactions can be done in non-traditional areas."

Moncrief continued, "By working with private companies, venture funds, and government entities such as the USDA's Rural Business Programs, we can bring new economy investments and jobs to Kentucky, Tennessee, and Arkansas, and the Appalachian counties of Ohio, West Virginia, Virginia, North Carolina, South Carolina, Georgia, Alabama, and Mississippi."

Moncrief cited several factors as being indicative of why the time is right to expand VoIP services in Kentucky and other rural areas of the Southeast:

* There were 37.5 million VoIP subscribers worldwide at the end of 2006, a 78 percent increase over the previous year, according to iLocus; and

* SinglePipe's target of small- and medium-sized businesses is the right strategy because:

* VoIP revenue from those two categories is projected to grow from $200 million in 2006 to more than $1.3 billion in 2009, according to the Yankee Group; and

* There are 5.6 million small- and medium-sized businesses in the United States, with 30 percent of those located in the Southeast, many of which are located in areas with little or no VoIP availability.

About SinglePipe Communications:

SinglePipe Communications, headquartered in a rural census tract near Louisville in Jefferson County, Kentucky, is a facilities-based wholesale communications provider. SinglePipe provides services to clients across the United States with points of presence throughout the Southeast. For more information, visit www.singlepipecom.com.

About Meritus Ventures, L.P.:

Meritus is a private, for-profit, venture capital fund established to make equity investments in private companies in predominantly rural areas in 11 states in southern and central Appalachia, including Kentucky. It is the first, and currently the only, Rural Business Investment Company in the United States. For more information, visit www.meritusventures.com.

About Chrysalis Ventures:

Founded in 1993, Chrysalis Ventures is a leading source of equity capital for young growth companies in the Midwest and South. Chrysalis invests primarily in early-stage and expansion-stage companies in healthcare services and technology, media and communications, and business services. With headquarters in Louisville, Kentucky and a second office in Cleveland, Ohio, Chrysalis has more than $300 million under management and has made investments in over 50 companies. For more information, visit www.chrysalisventures.com.