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I first met Gerry Hays when I was an undergrad at Indiana University in his Entrepreneurial Finance course. But Gerry didn't just give me the standard Venture Capital 101—he also helped me package and sell my first business. I'd have to say he knows more about Indiana Venture Capital and funding startups than just about anybody I know. In fact, the last time we grabbed drinks, we had one of the most enlightening conversations about raising capital in the Midwest. That's why I asked if he'd write this post.
He nailed it. . .
Enter Gerry Hays on Indiana Venture Capital:
Over the past decade, I’ve seen unbelievably positive change in the Indy startup community. There are more successful startups today than there have been at any other point in Indy’s history. Angie’s List just had an IPO. ExactTarget is also an undisputable home-run story. Aprimo recently reached a big exit and returned capital that can be re-invested into new opportunities. Groups such as Verge are injecting the youth and energy that’s so sorely needed in the community. And the Orr Fellowship is breeding a new crop of entrepreneurs every year.
However, one aspect of the community that has not changed is the struggle Indy startups face raising venture capital. While sub-$500,000 seed and Angel deals are achievable (funded mainly by early-stage funds, Angels, and family and friends of the founders), it is significantly more difficult to raise expansion capital. Try and raise $2,000,000 - $3,000,000 in a true Series A round from an Indy venture fund, and the odds get long. Very long. As a point of reference, the local funds don’t show up on the Cap Table of either Angie’s List or Exact Target.