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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowThe amount of capital raised by state technology firms in 2020 was way down from the previous year, but local industry leaders say that shouldn’t be taken as bad news.
After all, the venture and growth capital raised during a year marred by the COVID-19 pandemic still topped what was raised in 2018. And 2021 is setting up to be a strong rebound year, local tech officials said.
In 2020, more than $174 million in funding was announced by Indiana tech companies, according to a report released Tuesday by TechPoint, an Indianapolis-based industry advocacy group and tech accelerator.
That’s below the record $358 million raised by the state’s tech companies in 2019, but ahead of the 2018 total of $147 million.
In 2020, 71 Indiana tech companies publicly announced investments from venture capital funds, private equity funds or growth funds. Additionally, four companies or tech organizations announced they received grant money. Additionally, 32 Indiana tech companies were involved in mergers and acquisitions, the report said.
The biggest capital raises were made by fast-growing information technology firm Scale Computing, which closed on a $30 million round in December, and real estate technology firm Realync Corp., which announced a $22 million round in November.
TechPoint officials noted that momentum in fundraising increased significantly in the fourth quarter, setting up what they think will be a strong 2021.
Indiana tech companies raised just $14.8 million in venture and growth capital in the first quarter, $32 million during the second quarter, $28.3 million in the third and $98 million in the fourth. The rounds by Realync and Scale accounted for $52 million of the fourth quarter total.
“While the pandemic has had an impact on the Indiana tech ecosystem, it’s safe to say that the foundation for a strong rebound is in place,” said Roger Shuman, TechPoint senior relationship manager. “Venture capital, private equity and growth funds were created to be deployed. I have personally talked to firms who are now modifying their [approach] to invest at an earlier stage. This is potentially good news for Indiana technology companies looking to get funded.
“Out-of-state funds like BIP Capital of Atlanta and Base10 of the Bay Area made multiple investments in Indiana tech companies in 2020,” Shuman added. “As these investors continue to see value in Indiana’s thriving tech ecosystem, some are now opening offices in the state.”
Shuman also pointed to Indianapolis-based High Alpha’s launch of 10 new software companies in 2020 and the emergence last year of another accelerator, Next Studio, which already has seven portfolio companies, as a sign of strength in the local tech sector despite the ongoing pandemic.
TechPoint’s report comes out on the heels of a report released last week by the Indiana Economic Development Corp., which said the tech industry accounted for about 12% of the state’s new jobs last year.
“Indiana’s tech sector overall showed strong signs of optimism for 2021 …” said TechPoint CEO Mike Langellier. “The fact that so many of our companies found a way to pivot during unprecedented economic blows while coping with the human aspects of the pandemic is a testament to the resiliency of our people and our business leaders. We’re going to come out of this stronger and smarter than ever.”
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