IEDC boosting funding to support entrepreneurism, innovation

The Indiana Economic Development Corp. on Tuesday announced new efforts to enhance the focus on innovation and entrepreneurship throughout the state.

Among the updates is a boost in annual funding for venture development in partnership with Indianapolis-based venture firm Elevate Ventures and the creation of a new, $3 million pre-seed fund.

The IEDC estimates the efforts will double the number of state-supported venture development investments each year.

Senior Vice President of Entrepreneurship and Small Business David Watkins said the move is the culmination of an effort to gather feedback from founders and entrepreneurs on how to grow Indiana’s entrepreneurial ecosystem.

“It really is one step but kind of a big step for us to commit funding in this way to grow the number of investments that are being made through our partners at Elevate Ventures, but also grow the avenues by which startups and founders can access that that funding as well,” Watkins told Inside INdiana Business.

The IEDC has renewed its professional services agreement with Elevate Ventures, which received nearly $4.7 million in the previous fiscal year. The new PSA, which began July 1, increases that funding by 40% to just over $6.5 million.

The state said the goal of the funding increase is to build on the last two years of surpassing the $1 billion mark for venture activity, as well as Elevate Ventures’ record year of investments in Indiana startups at $22.8 million in 2022.

Watkins said the public-private partnership between the state and Elevate Ventures is a tremendous story on the impact on the venture capital landscape in Indiana.

“This is a reflection of the increase in the number of deals and dollars that we have the opportunity to support across the state and trying to de-risk early stage investments and induce private sector capital being put to work in Indiana’s founders and entrepreneurs,” he said. “This new agreement is a reflection of maintaining and leaning in to continue that level of investment moving forward.”

Elevate Ventures, in partnership with the state, is also launching the $3 million pre-seed fund to provide new funding opportunities for early-stage companies.

The new fund will replace the organization’s Community Ideation Fund and the Elevate Nexus Pitch Competitions, which Watkins said are sunsetting, and will nearly double the annual investment in early-stage companies.

Investments from the pre-seed fund will range from $20,000 to $100,000 and will not require matching dollars.

“As Indiana continues to become a global leader, the Pre-Seed Fund opens doors to more founders and startups at the earliest stages, equipping them with capital to help them leap from pre-seed to seed-stage investment,” Elevate Ventures CEO Christopher Day said in written remarks. “In 2024, Elevate Ventures is focusing on creating pathways for all innovation-driven entrepreneurs, ensuring access to capital, opportunities, resources, and delivering impactful connections and tools to nurture the growth of our generation of innovative e companies.”

The Community Ideation Fund and Nexus fund, he said, had certain rules and restrictions in place that limited how some investments could be made. With the Nexus fund, companies had to participate in the pitch competitions to try and earn funding, which only happened twice a year.

“We won’t have that structure in place as a gate on the pre-seed fund,” Watkins said. “Companies, startups, founders will be able to engage with Elevate Ventures at any time during the year and potentially be able to access a pre-seed fund investment.”

Indiana is also expanding its Small Business Innovation Research/Small Business Technology Transfer (SBIR/STTR) matching grant program. The state previously only provided matching grants for ideation-stage companies that received SBIR/STTR Phase 1 grants from the federal government. Now, the progam will cover Phase 2 grants.

The Applied Research Institute in Indianapolis will take over management of the program, as well as the Small Business Innovation Voucher program, from Elevate Ventures.

“We think ARI, with its focus over the last year on a lot of federal capture opportunities, [including] the tech hubs, the hydrogen hub…and the relationships that have been built there with the universities and the technology that is being commercialized in our universities, will be a combination that hopefully sees Indiana receiving an outsized share of those federal awards for our startups and small businesses,” said Watkins.

Lastly, the IEDC and Elevate Ventures are working to modernize their model for fostering startup activity on a regional level. The venture firm will eliminate its requirement for local communities to complete a fund raise to gain access to investment opportunities.

Additionally, the IEDC earlier this year committed $2 million to growing its network of 10 Indiana Small Business Development Center regional offices by adding more business advisors and ecosystem navigators to help entrepreneurs, innovators and startups get connected with resources.

“Just this year, [the offices] have met with or assisted over 6,000 entrepreneurs and small businesses across the state,” said Watkins. “We’re looking to increase the ability for those offices to assist Indiana startups, small businesses, and to be able to serve all of those businesses in all 92 counties.”

Watkins said the overall goal is to continue the momentum of attracting more venture capital dollars from outside Indiana and ensure that small businesses that are receiving assistance are growing thanks to the increased investment.