Bloomington-based angel investor fund has big growth plans

When the Bloomington-based not-for-profit Dimension Mill launched its first investment fund three years ago, it did so in hopes of spurring investment into local startups.

That effort, called the Flywheel Fund, this week closed its fourth fund, which totals $1.08 million from 52 individual investors.

The program has been so successful that the organization popularly known as The Mill recently launched two regional Flywheel Fund chapters around the state, and it plans to launch another, larger investment fund this fall to be known as Turbine.

“It’s kind of reset expectations for what we’re capable of,” said Pat East, The Mill’s executive director. “We wouldn’t have even had those thoughts three years ago.”

The Flywheel Fund’s first investment fund, which launched in mid-2020, raised $120,000 from 11 members, and it initially focused on Bloomington-based startups. Fund II raised $640,000 from 49 investors. Fund IV is similar in size to Fund III, which raised $1.08 million from 63 members. The fund now considers startups based anywhere in the Hoosier state and invests in about 10 to 15 startups each year.

Investors meet regularly to hear pitches from startups that have been pre-vetted by The Mill’s staff. If a majority of investors vote in favor of a startup, the fund makes an investment.

The Flywheel Fund focuses on Indiana-based tech companies with a valuation of between $4 million and $8 million. Most of the fund’s portfolio companies are software startups. The fund typically makes an initial investment of $75,000, and it prefers to be one of the final investors in a startup’s funding round.

The Flywheel Fund operates as a low-barrier fund. A new fund launches every year, and an investor can contribute as little as $10,000 to become a member of the fund, which operates as a limited liability corporation, or LLC.

The idea, East said, is to bring would-be investors off the sidelines and encourage them to get in the game. “We want to help create more angel investors.”

Based on the Flywheel Fund’s success so far, The Mill is already setting its sights on bigger investment goals.

This fall, The Mill plans to begin raising money for a second, larger, investment fund called Turbine. Details are still being worked out, East said, but Turbine will require a higher minimum investment, maybe $50,000 or $100,000, creating a fund large enough to make investments over a five- to 10-year span. It might focus on particular industries such as defense tech or health tech, and it might consider investments in non-Indiana-based companies, East said.

Turbine is launching thanks in part to the U.S. Economic Development Administration, which in 2021 awarded The Mill a $399,650 Build to Scale grant. The Mill can use that grant for legal expenses or other things necessary to launch Turbine, East said.

The Mill is also expanding the Flywheel Fund by establishing regional chapters. In May, The Mill launched a South Bend-Elkhart Flywheel Fund chapter with help from the South Bend-Elkhart Regional Partnership. A Greater Lafayette chapter launched in July with help from the Indiana Economic Development Corp., MatchBOX Coworking Studio and Purdue University.

Developing regional chapters is a new way for The Mill to reach investors and potential investment targets in specific markets, East said. The South Bend-Elkhart chapter includes nine investors who have contributed a combined $120,000, and the Greater Lafayette chapter includes seven investors who have contributed a combined $117,500.

Over time, East said, The Mill hopes to launch additional regional chapters—perhaps in Vincennes, Evansville, Zionsville, Columbus, Fort Wayne or Terre Haute. “There’s no shortage of potential areas we could expand into.”