Flow of venture capital for Indiana tech firms slows dramatically

The amount of venture capital raised by Indiana tech firms dropped dramatically in the first quarter, in comparison to the same period last year, in a likely indication of investor caution in the face of the coronavirus crisis.

There were 11 publicly announced capital investments and one grant in the quarter for a total of just more $14.8 million, according to TechPoint, a statewide tech advocacy group and accelerator.

The number of companies involved in equity raises was similar to the first quarter of 2019, but the dollar amount was much lower. During the first quarter of 2019, there were 12 publicly announced capital raises for a total of $87 million.

Indiana tech companies enjoyed a major haul in venture and growth funding in 2019, scoring a 260% increase over 2018, according to TechPoint.

In 2019, 62 Indiana tech companies publicly announced venture capital investments, grant funding, merger and acquisition deals, private equity and debt financing for total investments of more than $358 million. That’s a huge increase from the $135 million raised by Indiana’s tech companies in 2018.

But even 2018’s first-quarter venture capital haul, $33 million, dwarfed the haul in the first quarter of this year.

While local venture fund managers said it’s too early to tell how 2020 will turn out, most fund managers think the coronavirus outbreak in the U.S. will have a dramatic impact in fundraising as this year unfolds. Some think it impacted the first quarter.

Tech companies announcing capital raises in the first quarter of this year were Docket ($1.5 million), Simba Chain ($1.5 million), PlaneEnglish ($1 million), Quarion Technology ($700,000), Passageways ($5 million), VinSense ($50,000), Karyosoft ($50,000), Casted ($2.4 million), Brightlamps ($130,000), Enriched Couples ($40,000), Woven ($2.5 million).

Not included in the first quarter is $15 million recently raised by Indianapolis tech firm Lessonly. TechPoint said that would be included in the second quarter report.

TechPoint CEO Mike Langellier remains cautiously optimistic for the remainder of the year.

“In general, Indiana’s tech companies are less speculative, so we tend to fair better in uncertain times,” Langellier told IBJ. “That will buffer the tech companies here from the whipsaw effect [of the impact of the coronavirus outbreak]. But we won’t come out of this unscathed.”

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