Tech VC Investment Drops in Q1, But Optimism Remains

Venture capital activity in Indiana’s tech sector during the first quarter of 2022 was down compared to the previous year, but TechPoint says the numbers illustrate a new growth wave for investment activity. The state’s nonprofit tech accelerator says 36 companies raised a total of $52.2 million in the first quarter, compared to $134 million in Q1 of 2021. However, TechPoint Senior Relationship Manager Roger Shuman says this year’s investments primarily featured pre-seed and seed raises, while last year’s first quarter numbers were mainly focused on later stage investments.

In an interview with Inside INdiana Business, Shuman said this year’s Q1 numbers represent the start of a new flywheel effect.

“As you invest early on in those companies, those companies grow. They’re going to take on more investment. They get to a certain point. They become mature. They start acquiring other companies or get acquired and then that flywheel starts over and over again,” said Shuman. “As you look at Q1 for 2022 and you see 30+ investments in early-stage companies. To me, that just says there is a plethora of companies that are at early stage that will be those next scale-up companies and later stage companies that are taking on bigger investment.”

TechPoint says 24 of the 36 companies that raised money received capital from Indianapolis-based Elevate Ventures, which targets early-stage companies and “high-potential entrepreneurs.” High Alpha Capital and HG Ventures, both in Indy, also participated in capital raises in Q1.

Some of the startups that received seed funding in the first quarter included Castiron, The Juice, Conversight.ai, Woven, and Qualifi.

Shuman says startups that are receiving early-stage funding are coming from a number of places, including academia with companies forming out of Purdue University, Indiana University and the University of Notre Dame.

“Of course, you know, what Elevate’s doing with gBETA investing in early-stage companies, being involved in accelerators and pitch contests, there are a lot of opportunities for those early-stage companies,” he said. “Then, you look at what High Alpha’s doing; they’re literally spinning out their own companies. Three of the companies that raised this quarter were High Alpha companies that came out of the studio.”

Shuman says the state will continue to see investment in early-stage companies throughout 2022. However, he says we could see companies that landed major investments last year continue to make big moves.

“Companies like Formstack and Greenlight Guru, OnBoard, Bloomerang, and even Terminus, I think you’re going to see those companies that have now taken on that big investment start to acquire other companies. You’ve already seen that in Q1, Greenlight Guru made an acquisition. So, I think we’ll continue to see more of that.”

You can see a full breakdown of Q1 investment raises from TechPoint by clicking here.