Indiana Venture Report 2023

INDIANA VENTURE REPORT 2023

TA B L E O F C O N T E N T S

2

3

OV E RV I E W

4

N AT I O N A L V E N T U R E CA PI TA L T R E N D S

6

R EG I O N A L V E N T U R E CA PI TA L C O M M U N I T Y

8

V E N T U R E C A PI TA L I N V E S T M E N T S I N I N D I A N A

10

D I S T R I B U T I O N O F D E A L S BY R EG I O N

12

C O N C LU S I O N

13

E L E VAT E AC T I V I T Y

E L E VAT E V E N T U R E S .C O M

The Indiana Venture Report 2023 is a year-end assessment of venture investment activities in Indiana.

The report starts with a general look at national venture capital trends, followed by an analysis of venture capital activity in the Great Lakes states of Minnesota, Wisconsin, Michigan, Illinois, Indiana, and Ohio. Finally, venture capital activity in Indiana is compared across different sectors, firms, stages, and Indiana regions.

2023 saw a significant decline in the number of deals across several investments and stages. The investment total dropped from $1.09 billion to $526.8 million, down a little more than half. This drop in deal growth is, in large part, the product of a higher interest rate environment, which makes riskier investments like venture capital less attractive from a risk-adjusted return basis.

PitchBook Data Inc. (PitchBook), a database of private capital markets including venture capital (VC), private equity (PE), and mergers & acquisitions (M&A) transactions, was the primary source of investment information used in this report. This database was used alongside Elevate Ventures’ proprietary deal information and secondary data collected from Elevate Ventures’ key co-investment partners.

INDIANA VENTURE REPORT 2023

3

National Venture Capital Trends

In 2023, the landscape of venture capital underwent a significant transformation, largely influenced by the shifting economic environment characterized by rising interest rates.

The rise in interest rates marked a departure from the

the challenges faced by the industry. The situation was

era of “easy money”, as investors sought safer havens

further exacerbated by significant layoffs at prominent

for their capital, such as treasury bonds and savings

firms like OpenView, highlighting the tumultuous nature

accounts offering upwards of 5% returns. This shift

of the market. Deal counts across both early to late-

in investor sentiment, coupled with the prevailing

stage ventures experienced declines in this environment.

uncertainty in both private and public markets, has decreased investor risk appetite.

Looking ahead, the future of the venture capital industry is characterized by uncertainty. The challenges posed

According to data from PitchBook, 38% of venture

by rising interest rates and market volatility require a

capital firms scaled back their deal-making activities

flexible approach from both investors and entrepreneurs.

in 2023, which is reflected in the change of deals

While the allure of groundbreaking technologies like AI

completed and capital invested. The year 2022

presents immense opportunities, it also underscores

witnessed 16,563 deals completed and $241 billion

the importance of prudent investment strategies and

invested, compared to 2023, with 13,421 deals

thorough due diligence.

completed and $169.7 billion invested. This exhibits

4

E L E VAT E V E N T U R E S .C O M

The year 2023 witnessed 13,421 deals completed and $169.7 billion invested.

46.8%

29.1%

11.1%

9%

3.9% Wisconsin 0.1%

Great Lakes

Illinois 1.4%

Indiana 0.3%

All Others Michigan 0.6%

Massachusetts New York California Ohio 0.7%

Minnesota 0.7%

INDIANA VENTURE REPORT 2023

5

Regional Venture Capital Community Several states in the Great Lakes region experienced a decline both in number of deals and in dollars invested in 2023. Illinois, Ohio, and Minnesota led the way in the Great Lakes region, contributing 1.4%, 0.7%, and 0.7%, respectfully, of all the capital invested in venture in the U.S.

VC DOLL ARS INVESTED BY STATE - 2023

6

Early-Stage

Later-Stage

Seed

$3.5B

Early-Stage

Later-Stage

400 350

$3.0B

300 250

$2.5B

200 150

$2.0B

100 50

$1.5B

National Average

Illinois

Minnesota

Ohio

Michigan

Indiana

Wisconsin

0

LaterStage

92

129

74

82

74

34

40

EarlyStage

82

90

40

33

49

36

20

Seed

84

128

50

49

41

71

27

$1.0B $0.5B

E L E VAT E V E N T U R E S .C O M

Wisconsin

Indiana

Michigan

Minnesota

Ohio

Illinois

0

National Average

D O L L A R S

I N V E S T E D

(B I L L I O N S)

Seed

VC D E A L C O U N T BY S TAT E - 2 0 2 3

On a per-capita basis, Minesota, Illinois, and Indiana led the way with 28.7, 27.4, and 20.7 deals per million people, respectively.

Similarly, in terms of the states’ GDP, Minesota, Illinois, and Indiana generated the most deals per billion in GDP.

VC D E A L S PE R 1 M PEO PL E - 2 0 2 3 Seed

Early-Stage

VC D E A L S PE R $ 1 B G D P - 2 0 2 3

Later-Stage

Seed

40

Early-Stage

Later-Stage

0.5

35

0.4

30 25

0.3

20 0.2

15 10

0.1

5

0

National Average

Minnesota

Illinois

Indiana

Michigan

Wisconsin

Ohio

National Average

Minnesota

Illinois

Indiana

Michigan

Wisconsin

Ohio

0

LaterStage

14

13

10

5

7

7

7

LaterStage

.17

.16

.12

.07

.11

.10

.09

EarlyStage

12

7

7

5

5

3

3

EarlyStage

.15

.08

.08

.07

.07

.05

.04

Seed

13

9

10

10

4

5

4

Seed

.15

.11

.12

.14

.06

.06

.06

INDIANA VENTURE REPORT 2023

7

Venture Capital Investments in Indiana 2023 marked the biggest delta in deal count over the past decade. Coming from a record high deal count of 190, and over $1 billion in capital invested in 2022, 2023 proved to be a large downward shift, with only 141 deals completed and $526.8 million invested. The capital invested was reduced by a little more than half.

I N D I A N A H I S TO R I C A L VC D O L L A R S & D E A L S

8

150

$1.0 B

100 $0.5 B 50

0

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

0

Number of Deals

41

32

39

55

51

59

81

95

134

160

159

190

141

Dollars Invested (Millions)

$193

$164

$91

$183

$180.5

$157

$182

$257

$530

$498

E L E VAT E V E N T U R E S .C O M

$1,427.4 $1,088.6 $526.8

O F

200

N U M B E R

$1.5 B

D E A L S

Deal Count

2011

D O L L A R S

I N V E S T E D

Capital Invested

D I S T R I B U T I O N O F D E A L S BY T Y PE DEAL TYPE

DEAL COUNT

DEAL SIZE

Seed Round

71

$85.6M

Early Stage VC

36

$194.2M

Later Stage VC

34

$247.0M

Grand Total

141

$526.8M

D I S T R I B U T I O N O F D E A L S BY S IZE DEAL TOTAL

DEAL COUNT

% OF DEAL COUNT

Unknown/ Undisclosed

26

18.44%

0-0.49M

46

32.62%

0.5-0.99M

10

7.10%

1-4.99M

38

26.95%

5-9.99M

9

6.38%

10M+

12

8.51%

Grand Total

141

100%

D I S T R I B U T I O N O F D E A L S BY S EC TO R B2B SaaS remains a top sector for venture activities in Indiana, totaling over $262.1 million in 2023. The life sciences sector saw the second most capital invested, totaling $212.8 million.

SECTOR

DEAL COUNT

DEAL SIZE

Manufacturing/ Energy/Defense

6

2.8M

B2B

76

262.1M

B2C

25

49.1M

Life Sciences

34

212.8M

Grand Total

141

526.8M

Indiana continues to see primarily small, earlier-stage deals.

INDIANA VENTURE REPORT 2023

9

Distribution of Deals by Region

NORTHWEST

NORTH CENTRAL

NORTHEAST

$ 4 .7 M

$ 3 6 .7 M

9

5

$1.4M

6

Central Indiana continues to make up most of the state’s venture

WEST CENTRAL

capital activities. In 2023, the region generated 58.9% of all venture

$ 3 7. 6 M

deals, representing 74.0% of dollars

HEARTL AND $ 47 M

1

13

invested. Compared to other regions

NORTHEAST CENTRAL $300K

in the state, central Indiana’s venture

1

ecosystem benefits from its large size, growing talent pool, and presence of

CENTRAL $ 3 8 9. 8 M

entrepreneurs who have previously

83

had successful exits.

G R A N D TOTA L : WEST

141 D E A L S

$1.3M

$ 52 6 . 8 M

3

$ 0. 3 M

$ 1 0.1 M

15

SOUTHEAST

0

$23.2M

$23M

6

10

E L E VAT E V E N T U R E S .C O M

1

SOUTH CENTRAL

SOUTH

SOUTHWEST

EAST CENTRAL

3

I N D I A N A R EG I O N D E A L VA LU E %

I N D I A N A R EG I O N DEAL COUNT %

Central: 74.0%

Central: 58.9%

West Central: 7.1%

South Central: 10.6%

Northeast: 7.0%

West Central: 9.2%

Southwest: 4.4%

North Central: 6.4%

South: 4.3%

Southwest: 4.3%

South Central: 1.9%

Northwest: 4.3%

North Central: 0.9%

Northeast: 3.5%

Northwest: 0.3%

South: 2.1%

East Central: 0.1%

East Central: 0.7%

Southeast: 0.00%

Southeast: 0.00%

INDIANA VENTURE REPORT 2023

11

Conclusion In 2023, Indiana’s venture activity slowed with 141 reported deals, down from 190 in 2022 and 159 in 2021. Despite this, Indiana remained a significant player in the Great Lakes region venture capital scene. Total capital invested in Indiana also decreased from above $1 billion in 2022 to $526.8 million in 2023, with a focus on early-stage deals. B2B tech and life sciences sectors continued to attract the most capital. Central Indiana remained the primary hub for venture activity.

With its maturing infrastructure and expanding network of support, the state is poised to navigate the evolving landscape and sustain its momentum in nurturing innovative startups and driving entrepreneurial success into 2024 and beyond.

12

E L E VAT E V E N T U R E S .C O M

112

Elevate Activity Despite the prevailing economic conditions,

Deals in 2023

Elevate Ventures continues to invest in Indiana startup companies. Elevate committed $21.67

21.7M

million across 112 Indiana startups in 2023.

$

Elevate Ventures’ total investment since inception

Committed Capital in 2023

surpassed $170 million for a total of $171.6 million invested in Indiana companies. The number of companies receiving investment from Elevate surpassed 500 for a total of 558. These investments have resulted in a total of over $2.3 billion in coinvestment for these Indiana companies.

Elevate Ventures has been recognized by Pitchbook as the #1 Most Active VC in the Great Lakes Region since 2017. Additionally, Elevate ranks as the 15th Most Active VC in the United States and the 16th Most Active VC in Angel & Seed in 2023.

558

Indiana Startups Funded

#

15

Most active VC in the U.S.

INDIANA VENTURE REPORT 2023

13

Where Founders Flourish Elevate invests in cross-sector innovation-driven enterprises through our core pillars of Community, Capital and Acceleration. As the #1 seed and early-stage venture capital firm in the Great Lakes Region and Top 20 in the World, we are building a robust innovation ecosystem with companies, customers and mission-critical partners that fuel founders.

BY T H E N U M B E R S - S I N C E 2 0 11

558

$

171.6M

Indiana startups have

Total Invested

received funding

$

12.81X

Leveraged from

Leverage Ratio

2.3B

other capital sources

from Elevate

4,141

74%

2,975

$

Indiana Companies

of Companies Receive

Investors in

Average salary for people

Have Leveraged

Follow-On Funding

Elevate’s Network

employed by our portfolio

Elevate Resources

(Of those Elevate invests in)

14

E L E VAT E V E N T U R E S .C O M

92K

companies in 2023.

INDIANA VENTURE REPORT 2023

15