This Indiana Venture Report graphic breaks down the number of 2018 venture deals in the state by region. Provided image

This Indiana Venture Report graphic breaks down the number of 2018 venture deals in the state by region. Provided image

Northeast Indiana was among four regions of the state outside of the Indianapolis area to attract three or more venture deals last year, according to a study that showed 69 percent of them concentrated in the central region.

The Indiana Venture Report was released last month by Elevate Ventures, a statewide nonprofit investment and entrepreneurship development and advocacy group, which manages the Indiana Angel Network Fund and the Indiana Seed Fund.

Of 75 venture deals recorded in the state last year by PitchBook Data Inc. and Elevate’s proprietary data sources, 52 were in the central region. The northeast and south central regions had three deals each; the north central region had four, and the west central region had 10.

Indianapolis is the state’s biggest metro area by far. The West Central region is home to Purdue University in West Lafayette; the north central region has the University of Notre Dame in South Bend, and the south central region has Indiana University in Bloomington.

“Venture activities tend to aggregate amongst areas with a density of ideas, talent, and capital. Indiana’s venture activity has been growing in the last decade but is still capturing a very small portion — only .22 percent of the national total venture dollars,” Erica Schweyer, Elevate’s senior director of brand development and strategic initiatives, said in an email.

“Through a similar lens, Indiana regions outside Indianapolis or outside areas with major research universities tend to get less venture activities due to the lack of such density in ideas, talent, and capital,” she said. “Elevate has been actively working with northeast Indiana regional stakeholders to change that.”

In 2017, Elevate and the Northeast Indiana Regional Partnership announced their creation of Elevate Northeast Indiana, a $2.5 million collaboration to boost entrepreneurship and innovation in the region.

The organizations signed an agreement to continue working together for that purpose with Elevate contributing $1.5 million and the Regional Partnership contributing $1 million to the effort.

The funding would support entrepreneurial activities designed to endure beyond the initial term of the agreement, from 2017 to 2020.

Initiatives would include investments in local businesses, portfolio services, events for entrepreneurs and investors, marketing support, business coaching, access to professional resources and more.

The new partnership launched the Farnsworth Fund last year, which aims to create an entrepreneurial culture by surrounding new and aspiring founders with a community of like-minded entrepreneurs; connecting them with mentors, and assisting them financially with a $1,000 grant each.

The fund had $200,000 for the grants and planned to award 50 of them in 2018. Three of the grant recipients also were the first to receive a larger investment from a statewide Community Ideation Fund Elevate created last year.

The new fund designated up to $200,000 for business startup investment over three years in each of its four partnership regions. Investments from the fund would be awarded in amounts of $5,000 to $20,000.

Investments from the fund of $20,000 each went to 3B Apps, Apollo Dynamics and Blaire Biomedical.

Fort Wayne-based 3B Apps has been lining up clients in Indiana and out of the state for an app it developed for independent restaurants. The online and mobile app is designed to take orders for restaurants, food trucks, and corporate cafes. The entrepreneurs behind 3B are brothers Mitchell and Connor Skees.

Apollo Dynamics has developed software-as-a-service and wearable device technology for accelerating athletic conditioning and rehabilitation through motion analysis based on data collected through a wireless network of sensors, which measure and record the motion of joints as well as the forces exerted on them.

Blaire Biomedical has developed an app capable of providing diagnostic blood results in the field from a drop of patient blood applied to a cartridge that medical personnel slide into the company’s SmartMed case after attaching it to a smart phone.

The investments were not large enough to show up on PitchBook Data’s radar. The three northeast Indiana deals it recorded were Allied Payment Network in Fort Wayne, Nanovis in Columbia City and 10x Engineered Materials in Wabash.

Allied at the Northeast Indiana Innovation Center attracted $4 million from Plymouth Growth Partners and Nanovis attracted $5.5 million from investors including Elevate, 1st Source Capital Corp., Purdue’s Foundry Investment Fund, Commenda Capital, and Ellipsis Ventures.

10x Engineered Materials attracted investors including NCT Ventures to back its startup involving establishment of a $4 million, 50,000-square-foot operations center at 1162 Manchester Ave. in Wabash.

It is possible that the Indiana Venture Report’s regional deal count was affected by the fact that Elevate split Kosciusko County into three regions, with the northern third pulled into the north central region, a small portion of the south-western corner pulled into the Heartland region and the rest into northeast Indiana.

There are entrepreneurial and investment activities in northeast Indiana but many of the emerging companies attracting investment are not necessarily the type typically sought out for investment by venture capital firms, Schweyer said.

“Compared to typical venture capital, Elevate tends to take more risks and is more active in backing first-time venture entrepreneurial teams in an effort to start building some startup scale-up and venture density,” she said.

“It’s going to take time for companies to grow, mature, and create the type of successes that get venture capital’s serious attention,” Schweyer said.

“We are grateful for the regional support and the opportunities to build and execute programs that seed and assist entrepreneurs from the ground up, such as the Elevate Northeast Indiana partnership, Farnsworth Fund and the NIIC.”

The number of venture deals Indiana attracted last year was up 70 percent from 2017 but Elevate said venture capital activity in the state fell behind what was happening along those lines nationwide and in other Great Lakes and Midwest states.

“While the 2018 Indiana Venture Report highlights venture activity growth from 2017 to 2018, the data clearly shows that Indiana is only scratching the surface when it comes to venture activity compared to our regional neighbors,” Elevate CEO Chris LaMothe said in a statement.

“In simple terms, we still have work to do. While we celebrate the successes in this community, we know this is just the beginning. We are passionate about cultivating innovation to grow successful communities across Indiana.”

Indiana attracted $253 million in venture capital deals last year, with an average deal size of $3.4 million and a median of $1.05 million; 72 percent of the deals involved investment of less than $5 million.

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