After struggling recently to raise money, Hoosier health care and life sciences companies broke through in the first half of 2014, raising more than $100 million in venture capital.
Eighteen companies raised $100.8 million, more in six months than in any such stretch since Ohio-based BioEnterprise started keeping records on Midwest venture capital activity in 2005. And the pipeline of companies seeking investment is at record levels.
Investors seemed to rediscover the Midwest, pouring a record $777 million into 139 companies in the first half of 2014. The region tracked by BioEnterprise includes 10 states and western Pennsylvania. In the first half of 2013, Midwest companies raised $351 million.
“It’s been a banner first half for Midwest health care startups,” said Aram Nerpouni, CEO of the life sciences business development group. “Investment activity continued its upward trend and the company pipeline once again attracted broad investor interest with a record number of companies receiving funding."
The funding haul was big enough to catch the attention of the Wall Street Journal’s Venture Capital Dispatch publication.
Indiana posted the second-best performance among the 10 states when fundraising and deals are taken as a proportion of each state’s economy. The figures are derived from Bureau of Economic Analysis data for each state’s 2013 gross domestic product. On that basis, Hoosier life sciences companies raised $31.79 and created 5.7 deals for every $100,000 in gross state product.
Only Minnesota did better than Indiana's $100 million. With a slightly smaller economy, the Gopher State attracted $183.5 million on 43 deals.
Other states attracting hordes of cash were Ohio, with $155.3 million, and Michigan, with $113.9 million.
Each of the leading states’ totals was boosted by big deals. In Indiana, Warsaw-based Orthopediatrics Corp. raised a whopping $39 million from an existing investor, Connecticut-based Squadron Capital LLC, to help develop new products, expand its presence internationally and reduce its debt.
Because of the Orthopediatrics deal, more than half of Indiana's 2014 venture capital has gone to companies outside the Indianapolis area. Those companies include Fort Wayne-based BioPoly, Warsaw-based Solstice Medical and West Lafayette-based On Target Laboratories.
In the Indianapolis area, 10 companies raised a total of $39.5 million. The biggest chunk of that money, $16 million, went to Wellfount Corp., a health information technology company providing pharmaceuticals to long-term care institutions.
Other companies raising money included Indigo BioSystems, VoCare, Algaeon, SonarMed, hc1.com and AIT BioScience.