Indiana’s tech firms saw smaller investments, but more of them, in Q1

Indiana-based tech firms attracted more than $47 million from venture investors in 36 separate deals last quarter, according to a new report by Indianapolis-based TechPoint.

TechPoint’s second-quarter VC report, released this week, reveals the ongoing funding slowdown in the tech sector which began in the spring of 2022 following a record-setting 2021.

The report includes information on publicly reported investments in Indiana-based tech firms. (The actual investment amount is above the $47 million that was publicly reported, TechPoint said, because financial details were unavailable for five of the 36 reported deals.)

In comparison, TechPoint’s first-quarter report noted $66 million in total investments in 33 separate deals.

TechPoint recorded a total of $441 million in total investments in 132 deals for the entirety of 2022, and $958 million in total investments from 57 deals in 2021. The 2021 numbers were impacted by a handful of companies that each landed investments of $100 million or more.

Investment “numbers are down throughout the entire country, so Indiana is no exception to that,” said Roger Shuman, TechPoint’s director of venture engagement.

It’s difficult to say how much longer the funding slump could last, Shuman said, especially given the broader uncertainty about the U.S. economy. “No one can even say whether we’re going to be in a recession or not. It seems to be pretty unclear.”

But Shuman said he sees numerous reasons for optimism on the VC front, despite the decline in investment dollars.

For one thing, he said, the number of tech investments in Indiana is strong even if the total value of those deals has declined. That’s because most of last quarter’s investments were smaller sums secured by younger companies.

In the last quarter, 32 of the 36 reported investments went into pre-seed or seed-stage companies. TechPoint defines pre-seed investments as those of less than $500,000 without identifiable investment from professionally managed venture funds. TechPoint defines seed investments as those between $500,000 and $5 million without identifiable investment from professionally managed venture funds.

Today’s pre-seed and seed companies, Shuman said, could go on to become bigger companies attracting bigger investments.

Shuman said he’s also encouraged by the participation in TechPoint’s Venture Connect event this week, which drew a record number of participants. The event, which is designed to connect venture investors with startup companies, brought together 57 startups and 30 investors. Those are the largest numbers since TechPoint first launched the event in 2015, Shuman said.

“We’re bringing in the right investors and making the right connections so that we can grow,” Shuman said.

Traditionally, central Indiana has been a hot spot for tech activity in the state. But 47% of this year’s Venture Connect participants came from outside of central Indiana, Shuman said, and eight participants came from outside the state altogether. Venture Connect is geared towards Indiana-based tech companies but companies outside the state can also participate.

This year’s Venture Connect participants also represented a diversity of tech sectors, Shuman said, including life sciences, climate tech, ag tech and cybersecurity.

Shuman said the geographic and sector diversity at this year’s Venture Connect shows that the state’s economic development efforts—and the startup accelerators that groups including Gener8tor, The Heritage Group, TechStars and others have launched here in recent years—are starting to show results. “We’re starting to see it down here in the trenches,” he said.

Check out the entire TechPoint report here.•