Indiana firms see big drop in venture funding

Back to TopCommentsE-mailPrintBookmark and Share

Venture capital investments in Indiana trended down in 2012, but local investors see the market here steadily gaining strength.

Payments to venture-backed companies in Indiana totaled $84.1 million last year, according to data released Friday by PricewaterhouseCoopers and the National Venture Capital Association.

In 2011, venture payments totaled $177.9 million. While the 53-percent dropoff was large, most of it could be explained by the unusually large amounts raised in 2011 by Indianapolis tech stars Angie’s List Inc. and ExactTarget Inc., which raked in $55 million and $30 million, respectively.

Both companies staged initial public offerings soon afterward. Those successes, along with the acquisition of marketing software maker Aprimo Inc., have more venture capitalists eyeing Indiana’s IT sector, said Don Aquilano, managing director of Allos Ventures LLC, which has offices in Indianapolis and Cincinnati.

“I’ve spoken to a number of firms that have said, ‘Boy, what’s going on in Indiana. We’d like to learn more about the deal flow in Indiana,’” said Aquilano, whose firm is set to close this month on a new $40 million fund primarily focused on software and IT companies.

In 2012, computer and software companies continue to raise the most money, accounting for nearly $53 million of Indiana’s total take. The biggest haul went to Indianapolis-based Orbis Educational Services Inc., which raised $24.3 million from Philadelphia-based LLR Partners Inc. to grow its nurse education software business.

Also, Indianapolis-based Scale Computing Inc. raised $8.2 million last year.

“I see a lot of activity in the marketplace right now. And I expect more capital to come online in the next year,” Aquilano added.

Total venture funding in 2012 was a tick ahead of 2010, when Indiana companies raised $80 million.

Health care and life sciences companies accounted for most of the rest of the investment. Indianapolis-based Esanex Inc., a cancer development firm, raised $16.5 million last year from Indianapolis-based Lilly Ventures, Indianapolis-based BioCrossroads and North Carolina-based Intersouth Partners.

Also, Indianapolis-based Nico Corp. raised $6.6 million to continue funding growth of its brain-surgery tools.

David Johnson, CEO of BioCrossroads, which operates a seed-stage fund for life sciences companies, said investors continue to be risk averse in that sector, but have become more optimistic recently, particularly for biotech and health information technology companies.

“In the past year to 18 months, the environment is more optimistic, people are willing to think about some longer-term risk,” Johnson said. “There is plenty of money, as you know, sitting on the sidelines and the feeling is that more of it is going to play.”

Johnson noted that early-stage life sciences firms in Indiana have increasingly turned to angel investors, and that not all of those deals may be reported to the National Venture Capital Association.

The only other company to raise a sizable amount of money last year was Indianapolis-based Courseload Inc., which makes software for using digital textbooks. It pulled in $5.2 million from angel investors and Indianapolis-based radio company Emmis Communications Corp.


  • More cheerleading
    Rah, Indy, Rah. Everybody wants to do deals here, right? I mean, we hav Angie's List, a business without a viable model and we have ExactTarget, a business that would have been cutting edge in 1997 but is now just sort of funny. Keep drinking the Kool Aid. I work downtown and there is no business community here. Strip away all the jobs that depend on tax subsidies and downtown is a ghost town. I know. I've worked the numbers. What has this silly little rah-rah rag done?

Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. I am so impressed that the smoking ban FAILED in Kokomo! I might just move to your Awesome city!

  2. way to much breweries being built in indianapolis. its going to be saturated market, if not already. when is enough, enough??

  3. This house is a reminder of Hamilton County history. Its position near the interstate is significant to remember what Hamilton County was before the SUPERBROKERs, Navients, commercial parks, sprawling vinyl villages, and acres of concrete retail showed up. What's truly Wasteful is not reusing a structure that could still be useful. History isn't confined to parks and books.

  4. To compare Connor Prairie or the Zoo to a random old house is a big ridiculous. If it were any where near the level of significance there wouldn't be a major funding gap. Put a big billboard on I-69 funded by the tourism board for people to come visit this old house, and I doubt there would be any takers, since other than age there is no significance whatsoever. Clearly the tax payers of Fishers don't have a significant interest in this project, so PLEASE DON'T USE OUR VALUABLE MONEY. Government money is finite and needs to be utilized for the most efficient and productive purposes. This is far from that.

  5. I only tried it 2x and didn't think much of it both times. With the new apts plus a couple other of new developments on Guilford, I am surprised it didn't get more business. Plus you have a couple of subdivisions across the street from it. I hope Upland can keep it going. Good beer and food plus a neat environment and outdoor seating.