Indiana venture capital activity softens in latest quarter

Coming out of 2017's first quarter, venture capital activity in Indiana seemed to be picking up steam.

Coming out of the second quarter, it was basically sputtering.

Indiana companies landed $9.3 million in venture capital on five deals between April 1 and June 30, according to the latest PwC/CB Insights MoneyTree report, released Wednesday. That's down from $29.1 million (12 deals) in the first quarter and $28.8 million (13 deals) in 2016's second quarter.

Another survey—the PitchBook/NVCA Venture Monitor report published Monday—showed a much rosier picture for Indiana. It tallied $30 million worth of venture investments on 14 Hoosier deals.

But even that was a relatively weak showing compared to earlier quarters surveyed by PitchBook, including $53.5 million in 2017's first quarter and $71 million in 2016's second quarter.

The MoneyTree and Venture Monitor reports use different methodologies to tally venture capital investments and they often retroactively revise statistics. MoneyTree's five deals in the most recent quarter:

  • Esanex, an Indianapolis-based drug development company, raised $2.6 million;
  • SonarMed, a Carmel-based medical device company, raised $2.5 million;
  • Quantifi, an Indianapolis-based marketing experiments software firm, raised $2.3 million;
  • Springbuk, an Indianapolis-based health analytics firm, raised $1.5 million;
  • The Bee Corp., a Bloomington-based agricultural data analytics firm, raised $360,000.

MoneyTree didn't include freelance-marketer firm Torchlite's $2 million capital raise or music-marketing startup Fuzic's $3 million haul—both announced last month.

PitchBook included both in a second-quarter deals list requested by IBJ, but the list incorrectly said Torchlite raised $4 million and Fuzic raised $3.5 million. The Pitchbook list did not mention Bee Corp. or SonarMed.

Despite the shortcomings, the reports are the best barometers of activity between venture capitalists and emerging Hoosier companies. And one recent trend shows up in that activity—the average investment amount is shrinking.

Since the beginning of 2013, Indiana companies have landed an average of $2.7 million per deal, according to MoneyTree data. Over the past eight quarters, that figure is about $2.5 million. Over the past four quarters, it's been $2 million.

The trend has sparked debate in some circles about whether Indiana has enough mature startups ripe for bigger deals or if the issue is more attributable to a dearth of local venture capital available to make those deals.

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