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Hoosier companies attract more venture capital, but total lags glory days

January 23, 2015

Venture capitalists poured more than $47 million into emerging Indiana companies in 2014, a figure that’s higher than the previous year's but nowhere close to the cash pumped into Hoosier companies annually between 2007 and 2012.

Early-stage and growth-stage companies raised $47.3 million on 20 deals last year, according to the annual MoneyTree Report published by PricewaterhouseCoopers and the National Venture Capital Association.

That’s more than double the $23.4 million invested in 2013, but only 38 percent of the $123 million per-year average invested for six years starting in 2007.

No less than $70 million was infused in each of those years, including $232 million in 2009. Those years were largely defined by firms like Angie’s List, ExactTarget and Stonegate Mortgage, which raised eight-figure sums before initial public offerings.

While Indiana saw a bump from 2007 to 2012 that sent venture funding near dot-com era high marks, the Midwest and the country as a whole did not. However, the $2.2 billion invested regionally and the $48.3 billion invested nationally in 2014 are 13-year and 14-year highs, respectively.

Ting Gootee, chief investment officer at Indianapolis-based VC firm Elevate Ventures, said Indiana continues to cultivate a robust startup community with respect to ideas, technology and investment capital. But its high-growth companies ripe for scale-up opportunities have yet to develop in greater numbers.

"Those kinds of company success stories, in quality and quantity," she said, "are essential to attracting meaningful amounts of venture capital to the state."

Fifteen of the 20 Indiana deals in 2014 came in the Indianapolis area. The largest deal was a $10 million equity deal by Precision Hawk USA Inc., a former Noblesville-based drone maker and software firm. The round was led by Indiana University’s Innovate Indiana Fund and Intel Capital Corp.

The company, which employed about a dozen in Noblesville at its peak, moved its headquarters to Raleigh, N.C., in November in part because of flying permits and partnerships with universities there, a spokeswoman said. The firm still has five employees in Noblesville.

The second-largest deal was $7 million snagged by Indianapolis-based marketing tech company SmarterHQ, which was previously known as Smarter Remarketer. Massachusetts-based Battery Ventures led the round.

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