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Venture capital up in Indiana, report says

March 21, 2019 GMT

Venture capital investment in Indiana startups increased by 70 percent last year as compared to 2017, a report being released today shows.

That’s the good news in the 2018 Indiana Venture Report released by Elevate Ventures, an Indianapolis-based venture development organization. The bad news is that the state lags behind others in the Midwest and Great Lakes areas.

In the Great Lakes region, where Indiana is one of only seven states, it received only 6 percent of dollars invested for seed, early and later-stage venture capital deals in the region.

Steve Franks, a local business coach, wasn’t surprised by the data Wednesday. But he also wasn’t discouraged by it.

“I want to see the report in two years, three years,” he said, alluding to progress being made.

Only about one-fifth of 1 percent of venture capital dollars invested nationwide last year came to Indiana, according to the data. About 55 percent of investment dollars nationally went to California-based companies.

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Chris LaMothe, Elevate Ventures CEO, said in a statement that “the data clearly (show) that Indiana is only scratching the surface when it comes to venture activity compared with our regional neighbors.

“In simple terms, we still have work to do,” he said. “While we celebrate the successes in this community, we know this is just the beginning. We are passionate about cultivating innovation to grow successful communities across Indiana.”

Of the 75 venture capital deals reported in Indiana last year, only three were in northeast Indiana. Almost 70 percent : or 52 deals : were in Indianapolis and surrounding counties in central Indiana.

State and local officials have placed a priority on supporting startup businesses in recent years, responding to studies that show regions flourish when they provide entrepreneurs with access to work space, mentors and investors.

Franks is program manager for one of those efforts, the Farnsworth Fund. The fund distributes $1,000 checks to budding entrepreneurs in the earliest stages of pursuing promising ideas. The micro-grants’ relatively small size allows supporters to bet on unconventional ideas that aren’t guaranteed winners, organizers say.

“You have to start somewhere,” Franks said of the pre-seed money. “We think the entrepreneur has what it takes : they’re on the ball.”

So far, 88 of the grants have been awarded since the first were handed out in May 2018.

On Wednesday afternoon, Franks participated in a panel discussion about creating an entrepreneurial ecosystem. About 30 people attended the local session, which included participants from the University of Notre Dame and the San Francisco-based 1517 Fund.

“The people that work out of San Francisco are here multiple times a year. They feel at home,” Franks said, adding that northeast Indiana is on their radar, even if it isn’t in the bull’s-eye.

More than 40 percent of venture capital dollars invested last year in Indiana went to information technology companies. The health care industry received more than 30 percent, according to the study, which used data from Elevate Ventures and PitchBook Data Inc., among other sources.

Of all the capital deals reported in Indiana last year, almost three-fourths were for less than $5 million.

sslater@jg.net