Indiana’s tech firms saw strong venture investment activity in 2Q

Venture investors poured $166 million into Indiana tech firms in the second quarter—a sharp increase from the previous quarter despite the nationwide tech slump—according to a new report from Indianapolis-based TechPoint.

TechPoint’s second-quarter VC Report, released this week, includes information on publicly reported investments in Indiana-based tech firms. The data showed that tech investments around the state grew sharply from the first quarter, when firms attracted only $52.2 million.

“The second quarter was really strong—stronger than I thought it was going to be, to be honest,” said Roger Shuman, TechPoint’s senior relationship manager. TechPoint is a not-for-profit organization that exists to support and promote Indiana’s tech sector.

Investment levels can fluctuate from quarter to quarter, Shuman said, but he hasn’t noticed any strong patterns of seasonality to Indiana’s venture investments.

Most of the investment dollars last quarter came from four late-stage investments totaling $128.5 million. But half of the 24 deals were pre-seed or seed investments. Pre-seed investments are defined as less than $500,000, while seed investments range from $500,000 to $5 million. Last quarter, three pre-seed and nine seed investments totaled $18.8 million in total investment.

Despite the fact that these are smaller deals, Shuman sees the number of early-stage investments as a good indication that investors see promise in Indiana’s youngest tech companies. “We’re seeing more investments into earlier stage companies, which is a great sign.”

Shuman said he’s also encouraged by the amount of so-called “dry powder” in the system. In the venture capital world, dry powder refers to money that is available and earmarked for investment. According to the data analysis firm Pitchbook, as of June 30 U.S. venture capital investors had $290 billion in dry powder available, up from $234 billion at the end of last year. In comparison, that number was only $72 billion in 2012.

The availability of dry powder bodes well for future investment activity, Shuman said. “When [venture firms] have dry powder, that money is intended to be invested.”

Second-quarter investments were down from the same period a year ago, when Indiana firms landed just over $193 million in venture investments. But, Shuman said, the year-ago figures were skewed by Indianapolis-based Greenlight Guru, which landed a whopping $120 million in June 2021.

2021 was a record year for investment both in Indiana and nationwide: Indiana tech companies landed more than $958 million in combined investment last year, fueled by a handful of companies that secured $100-million-plus investments.

Check out the entire TechPoint report here.