My article in the August 2021 edition of BizVoice®, “Investing in Indiana: Out-of-State VC Remains Critical,” focuses on the importance of investment in Indiana’s tech ecosystem from investors beyond our borders. A source for the story was Christopher Day, CEO of DemandJump – an Indiana digital marketing company.
As noted in the story, DemandJump enjoys support from Atlanta-based Panoramic Ventures. The company has also benefited from pitching to the high-profile Rise of the Rest seed fund in the past.
“We were honored and humbled to even pitch,” Day remarks. “That got us exposure to coastal investors and it was highly successful.”
Day relays that out-of-state investment is critical for any technology company in Indiana, although he believes the state would benefit greatly by putting emphasis on local investment. He says:
The reason is we don’t have any growth capital here to speak of. If you’ve produced well at your previous jobs and have ex-bosses who will speak highly of you, it’s pretty easy in theory to go out and raise $250,000 to $1 million, maybe even $2 million, to get a company started.
But when it comes time to raise growth capital, we don’t have funds here. Maybe one (fund) that could be considered that. But when you think of growth capital in terms of coastal investors, that is the engine … we just don’t have the funds here so we have to attract capital from outside the state.
This hits on a hot-button that I’m pretty passionate about. It’s a massive pain point Indiana has. I believe our biggest export is wealth. That’s a problem. The recycling of wealth within an ecosystem is what makes it better and stronger over time.
(If our goal is to raise the average wage of Hoosiers above the national average), the best way to do that is to grow jobs in technology, health care and advanced manufacturing – even ag tech.
All of our investment goes into hiring people … you can’t do that out of cashflow. You have to do it with investment.
When our winners end up exiting, like ExactTarget, the vast majority of that wealth creation went straight back to Boston and did not get recycled here in Indiana … when the risk-adjusted returns get exported out of state, it doesn’t get invested here.
If I was governor, I would create a billion dollar fund to invest real growth capital in Indiana companies. Austin (Texas) is what it is today because 20-30 years ago, Austin Ventures was created and enabled those winners of the winners to grow fast.
(Why do our current investors choose Indiana companies?)
It’s a simple concept. I think Indiana is the nation’s nucleus. That’s based on the productivity boom – the concept of data colliding with all industries. All companies are pretty much in the data business. It occurs in the center of the country because of close proximity with all of these mission critical industries and data.
Day adds his contention that there are seven ingredients that make Indiana the epicenter for this “nation’s nucleus” concept:
- Infrastructure
- Talent
- Mission critical industries
- Technology
- Lifestyle
- Cost of living
- Regulatory environment
“In those ingredients, Indiana has more No. 1 rankings than anyone’s aware of, and we don’t talk about it because we’re a humble people,” he points out. “I think that’s why out-of-state investors like investing in Indiana and we need to get louder about it.”
Roger Shuman, senior relationship manager at TechPoint, was also cited in the story – and concurs with Day.
“While it’s great to see growing investment activity from out-of-state venture capital firms, we also need to see new Indiana firms and the expansion of existing firms,” he concludes. “Motivated out-of-state venture capital is good; motivated local venture capital is better.”
Matt Ottinger is director of digital media and legislative communications for the Indiana Chamber. He is also a writer for the Chamber’s award-winning BizVoice magazine and has been with the organization in this tenure since 2007. He also worked for the Chamber in 2003 before moving to Wyoming for several years.
