Indianapolis-based angel investor group had banner year amid 2023 slump

Indianapolis-based investment group VisionTech Angels escalated its dealmaking activity last year in two major measures, despite the sluggishness in the broader market.

VisionTech reported this week that it invested a total of $2.88 million into 18 different companies last year, including eight investments into new companies and 10 follow-on investments into companies that VisionTech members had previously funded. The total number of deals was a record for the group.

That total deal value is 18% higher than in 2022, when VisionTech invested a total of $2.4 million into 16 companies.

VisionTech’s investments last year included Minneapolis-based Pelvital, which has developed a device for treating urinary incontinence in women. The angels invested a total of $259,900 into this company in two separate rounds.

Members also invested $165,000 in West Lafayette-based Amplified Sciences. The Purdue University-affiliated startup is focused on early detection of pancreatic cancer.

“We had a really great year in 2023,” VisionTech Executive Director Ben Pidgeon said.

In comparison, dealmaking activity was down last year in Indiana and nationwide, both in terms of the number of deals and the total value of those deals.

According to data analytics firm PitchBook, U.S. firms attracted a total of $170.6 billion in venture funding last year, down 30% from $242.2 billion in 2022. The number of deals dropped 23%, from 17,592 in 2022 to 13,608 in 2023.

The PitchBook data also shows that Indiana firms attracted $730.5 million in venture investments last year, a drop of 2% from $748.7 million in 2022. The number of venture deals dropped 13% year over year, from 188 to 164.

VisionTech is an angel investors network of individuals who pay annual dues to join. Members gather to hear pitches from pre-screened startups, and individuals can decide whether and how much to invest in any given deal.

The group currently has more than 130 members in Indiana and Ohio. Since its launch in 2009, the group has invested more than $27.4 million into 71 companies across the U.S., with a focus on hard tech, life sciences and business-to-business software-as-a-service startups.

Pidgeon said it’s difficult to pinpoint why VisionTech’s dealmaking accelerated last year amid the broader slump. But he did point to several factors that created favorable conditions for investors last year.

For one thing, he said, company valuations have dropped significantly since their peak in 2021, when interest rates were near zero and the venture investing market was red-hot.

As an example, Pidgeon said, a company valued at between $5 million and $7 million in 2021 might have seen its valuation drop to between $3 million and $4.5 million by the end of last year.

A drop in valuation is advantageous to investors because it means the investor gets a larger ownership stake in a company for the same amount of investment. (The situation is reversed for company founders, who benefit when the valuation of their business increases.)

Pidgeon also said the waves of tech-industry layoffs over the last 18 months or so have led some of those laid-off workers to start their own companies—which creates more potential opportunities for investment into those startups.

Some other Indiana-based investing groups saw mixed results in 2023.

The Flywheel Fund also saw increased activity last year. The original Flywheel Fund was launched by Bloomington-based not-for-profit Dimension Mill in 2020 with the intent of spurring angel investing activity. Last year the organization established two new regional funds, one for investors in the greater Lafayette area and one for South Bend-Elkhart area investors.

In 2023, Flywheel investors invested in a total of 28 deals with a total value of $1.02 million. In comparison, they invested in 17 deals worth a combined $900,000 in 2022.

The Bloomington-based IU Angel Network saw a decline in activity last year, closing five investments totaling about $540,000, said Jason Whitney, the network’s executive director.

“It was a down year for us overall but considering the economic conditions it was nice to just continue to move forward with deploying capital and helping companies grow,” Whitney said.

Whitney noted that the IU Angels have already closed on three investments totaling $250,000 this year—deals that were presented to members last year but that did not close until this month.

The IU Angel Network is made up of Indiana University-affiliated members who invest in IU-affiliated startups.