Category: Certified Technology Parks
It should come as no surprise that Indiana is host to a growing number of veteran angel investors who are choosing to stay in their home state and support the communities in which they live. In addition to being a great place to live with lower costs of living compared to the coasts, Indiana provides a great environment for entrepreneurs and investors that includes premier research universities, favorable government and tax regulations, and a Hoosier culture that places value on people and relationships.
Indiana based Venture Capital (VC) funds are generally smaller, reducing the amount of money available for multiple rounds of funding. This can pose serious hurdles for entrepreneurs seeking financial support to get their ideas off the ground. Angels play a very important role in driving investment and “deal flow,” feeding VCs by funding startups to a stage mature enough for later stage investment. Angel backing builds credibility for a startup.
Angels are by nature less risk adverse and highly focused on people, enthusiasm, and trustworthiness. Angels across the country are forming groups and pooling resources to maximize their ability to invest in earlier stage technology, increasing deal flow. Indiana has several angel groups (for example HALO and MainStreet Ventures) that seed early stage, high-growth companies and offer assistance in other ways as advisors, board members, mentors, and by forming strategic alliances and networks. These groups have a broad, statewide reach and have a strong interest in helping to build the next generation of entrepreneurs. The end result is better quality deals, deal flow and deal structure.
Indiana’s universities are playing an increasingly visible role in supporting entrepreneurism by creating funds, such as Purdue’s philanthropic Emerging Innovations Fund, which is focused on small, finite, milestone based awards made to advance technologies from the lab to the marketplace. This early funding will improve the probability of attracting additional investors and market interest. The awards will be used for early commercialization efforts such as intellectual property enhancement; “freedom to practice” analysis, prototype development and testing, market research and commercial assessment, feasibility studies for production scale-up, determination of regulatory, reimbursement pathways and preliminary business plans. These types of alternatives expand the pipeline of investable research and technology, driving deal flow and increasing investment interest in the state. These types of funds create deal flow for early stage angel investors.
In the near future, as capital markets tighten for variety of reasons, Indiana angels will be the lifeblood of entrepreneurs on a regional basis. We are doing great work in creating deals that are attractive to the major VC firms on the coasts. We are seeing an unprecedented number of visits of major VCs to Indiana. These nationally focused investors often are follow-on investors to our local angel groups and regional VCs. Sophisticated angels, regional VC capital and ties to the coasts provide a winning combination for Indiana.
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