Heartland Ventures, a Columbus, Ohio-based venture capital firm with a unique business model—and strong ties to Indianapolis—has closed on its $52 million second investment fund.
Heartland, which opened its Indianapolis office in 2019 and has two of its nine employees here, also has offices in South Bend, San Francisco and New York City.
The firm’s business strategy is to secure investments from established Midwestern companies in a variety of industries, then use that funding to invest in startup tech firms that are developing products that could benefit those investors. Another goal is to lure some of those startups—many of which are based on the coasts—to establish local offices so they can be close to their Midwestern customers.
“All of our investors are business owners in Indiana and Ohio,” said Heartland Ventures’ Managing Director Max Brickman, a Wisconsin native who graduated from Indiana University’s Kelley School of Business and now lives in the Columbus, Ohio, area.
Brickman said Heartland’s investors include privately held companies or affiliated executives of companies in a variety of industries, including Indianapolis-based construction firm Shiel Sexton Co., Indianapolis-based equipment manufacturer Wood-Mizer, and Fishers-based architecture and engineering firm RQAW Corp., among others.
Heartland closed its first investment fund, a $15 million fund, in 2017. All of the Fund I investors came back to invest in Fund II, and some new investors also joined for Fund II, Brickman said.
Fund II closed earlier this year, but Heartland did not announce the fund’s closure until this week. Fund II was oversubscribed, meaning that it exceeded its original fundraising goal. “We were targeting $40 million for Fund II, Brickman said.
Heartland’s investors also help shape the firm’s investment strategy. About half of the firm’s staff focuses on working with its Indiana and Ohio investors to understand their operations and the problems they are facing. Then this information is shared with Heartland’s California and New York City employees, who scout for investments that fit the investors’ needs.
In many cases, Brickman said, Heartland functions as an extension of its investors’ research and development efforts.
“There’s a huge amount of opportunity in basically bridging technology and industry to provide a faster feedback loop between the two,” Brickman said.
The venture firm typically invests between $500,000 and $2 million at the seed or Series A levels. It expects to make 20 investments over the next four years and has already invested in several companies: autonomous forklift company Third Wave Automation, parking platform Parkade and construction-focused business development platform ProjectMark.
Heartland’s strategy has already shown results, Brickman said. A few examples:
—Shiel Sexton is working with Heartland portfolio company Firmus Ltd., a Tel Aviv, Israel-based startup. Firmus technology can scan construction drawings to uncover design errors, helping customers avoid construction delays and rework.
—Wood-Mizer is working with Heartland portfolio company StrongArm Technologies Inc., a Brooklyn, New York-based company whose wearable technology helps industrial workers avoid injuries.
—Heartland portfolio company Soil Connect, a startup based on Long Island, New York, entered the Indianapolis market earlier this year. The company offers a digital marketplace to connect buyers and sellers of soil, aggregates and other building materials.