Elevate says state funding freeze endangers startups, entrepreneurial community

Elevate Ventures CEO Christopher Day said Monday that he fears “catastrophic” consequences for the organization and the state’s startup and entrepreneurial community if a funding freeze announced last week by Indiana Gov. Mike Braun’s administration is not resolved quickly.

Already, Elevate officials told IBJ, 48 early-stage companies could be affected. Those are startups that are far along in the pipeline for investments, meaning that they were potentially “days or weeks” away from funding approvals when the freeze was announced, said Elevate Managing Partner Matt Tyner Jr.

And Day said he wasn’t sure how long Indianapolis-based Elevate, a nonprofit organization that invests state and federal money on behalf of the Indiana Economic Development Corp., could continue to operate as currently configured under Braun’s order.

But Elevate officials also said Monday that they couldn’t be sure about the full impact of Braun’s move because at that point neither the Governor’s Office nor the IEDC had officially notified Elevate, with which the state has partnered for 14 years, about exactly which accounts or payments had been frozen, why the action was taken or how long it might last.

Braun, who was elected governor in November and took office in January, announced Thursday that he would hire an independent auditor to investigate the IEDC, the state’s economic development agency, and affiliated organizations.

Braun’s commerce secretary, David Adams, then announced that the “current funds that have been designated to Elevate Ventures are now frozen.”

Neither Braun nor Adams detailed the problems or concerns that led to the decisions but pointed to anonymous accusations reported in a political newsletter that raised questions about the relationship between the IEDC and Elevate.

The Governor’s Office did not respond to an IBJ request last week for a briefing that could provide more details about the state’s concerns. And on Monday, the Governor’s Office and the IEDC did not respond to IBJ’s messages seeking comments for this story.

Day said he was “saddened and baffled” by the governor’s actions and the allegations in the newsletter article, which he said had “no specific attribution to an author, references anonymous sources, contains factual inaccuracies and includes misrepresentations.”

Adams said last week that the state freeze includes a round of federal funding from the State Small Business Credit Initiative, a U.S. Treasury Department initiative to invest in local small businesses. Elevate officials said about 80% of the money it invests in early-stage startups comes from SSBCI funding. Those deals are approved by the IEDC before any companies receive money.

Elevate had been expecting to receive an additional $19.6 million in SSBCI funds this spring. But Adams said holds on that funding “are in place pending further evaluation.”

Adams did not specify whether the state would also freeze a monthly payment the IEDC makes to Elevate under a professional services agreement to manage startup investments and offer programming and support for the state’s startups and entrepreneurs.

But Adams added, “We do expect that Elevate Ventures will fulfill its financial obligations to the IEDC.”

In 2024, Elevate made 94 investments on behalf of the state totaling $14.4 million. Since its formation in 2011 as a sort of spinoff from the IEDC, Elevate has invested more than $189 million in state and federal funding into 606 companies, all approved by the IEDC.

Under a three-year agreement with the IEDC that runs through June 30, 2026, the state provides $541,667 per month to fund Elevate operations, including staff salaries, programming and other day-to-day expenses of running the organization.

Day said Elevate typically receives the payment a week or two before the end of each month. Its last disbursement came April 17.

“If we do not receive the next monthly payment, we may be faced with catastrophic decisions that will negatively impact the Indiana entrepreneur and innovation ecosystem,” Day said.

Elevate hasn’t made any of those decisions yet, Day said, but they could include staff reductions or programming cuts. He said Elevate has some amount of financial cushion—he declined to say how much—but acknowledged it would offer only “a very short time frame” of a buffer if the monthly payments cease. The organization currently has 24 employees.

Day, who joined Elevate in 2022, said the organization and the larger entrepreneurial ecosystem it serves were blindsided by both the newsletter report and by Braun’s announcement. Day said Elevate learned of the funding freeze as state officials announced it on Thursday.

When IBJ interviewed Elevate officials on Monday morning, they had yet to receive an official notice about the funding freeze and had not met with state officials about the governor’s concerns.

IBJ reached out to the IEDC and Braun’s office through email and phone messages early Monday afternoon seeking comment about the situation. Later Monday, Day said an IEDC official contacted him about working to schedule a meeting for later in the week to discuss details.

“The entrepreneurship and innovation ecosystem as a whole is highly concerned about these abrupt decisions,” Day said.

Tyner said Elevate had been getting “nonstop” queries over the last few days from companies worried about how the funding freeze could impact them. But Day said he had few answers to offer.

Elevate said it performs due diligence on potential investment targets, then presents detailed analyses of each company to the IEDC, which makes the final decision about whether to approve the funding.

Of the 48 companies that are farthest along in the funding pipeline, Elevate officials said 17 had already had funding approved by the IEDC, with another eight in the pipeline for IEDC consideration. The remaining 23 companies were nearing the point that their funding would be presented to the IEDC.