Health VC dollars tripled in Indiana

After a spectacular start, investments in Indiana’s health care companies slowed to a trickle in the second half of 2014, according to data released last week.

Even so, more Hoosier companies than ever attracted outside investments last year, helping Indiana record its largest haul of health-related venture capital since 2007, according to BioEnterprise, a Cleveland-based life sciences business development group. It tracks investment activity in 10 Midwest states, including Indiana, as well as the region around Pittsburgh.

Indiana’s health care companies attracted $103.8 million in investments last year, the highest total since attracting $135.6 million in 2007. All but $3 million of last year’s investments came during the first six months of the year.

“We are certainly excited about all of the activity that occurred in 2014, and a sizeable portion of that funding came from investors outside of Indiana,” wrote Brian Stemme, a project director for BioCrossroads, the Indianapolis-based life sciences business development group. “It’s important to note that the timing and amount of financings are not linear, but rather dependent upon a company’s need for funding. “

Stemme noted that so far in 2015, four Hoosier health care companies have raised more than $10 million.

Last year’s investment haul was up by 225 percent from 2013—when Hoosier health care companies brought in $32 million—and more than triple the average during the previous four years.

Yet health-related companies in neighboring states continue to outraise their Hoosier peers by significant amounts. Indiana ranked seventh out of the 10 states tracked by BioEnterprise in what was the busiest year on record for Midwest life sciences investments.

All told, the region saw $1.78 billion flow into health care companies last year, up by 135 percent from the previous year. The previous record for Midwest health care venture capital was $1.2 billion in 2007.

Topping the list last year was Ohio, which brought in $499.3 million, followed by Minnesota, which attracted investments of $406.3 million. Illinois, Wisconsin, Michigan and Missouri also ranked ahead of Indiana.

“All in all there is a robust pipeline of attractive healthcare companies in all stages building rapidly in the Midwest,” said Aram Nerpouni, CEO of BioEnterprise, in a prepared statement.

When adjusted for the size of each state’s economy, Indiana’s health care investment haul ranked fifth—behind Minnesota, Ohio, Wisconsin and Missouri, in that order.  The size of each state’s economy was based on 2013 GDP figures from the Bureau of Economic Analysis.

From 2005 to 2013, Indiana ranked No. 6 among the 10 Midwest states in terms of venture capital dollars as a proportion of the state’s overall economy.

Indiana continued to rank a bit better on number of investment deals, adjusted by the size of each state’s economy. In 2014, there were 24 investment deals—with money going to 20 Hoosier companies.

That ranked Indiana No. 4 in the Midwest—behind Minnesota, Ohio and Wisconsin. From 2005 to 2013, Indiana ranked No. 3 in investment deals as a proportion of overall economy.

The biggest single investment in Indiana last year went to Warsaw-based OrthoPediatrics Corp., which raised $39 million.

West Lafayette-based On Target Laboratories and Indianapolis-based Wellfount Corp. each raised $15 million. And Indianapolis-based Indigo BioSystems Inc. raised $8.5 million.

In the second half of the year, seven Hoosier health companies raised investment capital. They included Carmel-based MB2 ($1.5 million from angel investors), Columbia City-based Nanovis ($400,000 from angel investors), Indianapolis-based Marda Medical ($300,000 from angel investors), Indianapolis-based ClariCare ($200,000 from angel investors), Indianapolis-based Diagnotes ($200,000 from angel investors and BioCrossroads’ Seed Fund).

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