Indiana Tech Sector is Back on Track

By Mike Langellier, CEO TechPoint

The state’s best kept-kept secret - that Indiana is a progressive career destination - is out of the bag, and that’s great news for Indiana businesses and Hoosiers in general. For those with an interest in tech, it’s even better news.

In the not-so-distant past, tech entrepreneurs and tech savvy young people thought they had to go to the coasts to launch a tech business or career. Hoosier tech and business leaders would champion the Heartland as prime for talent and entrepreneurial spirit, but 10 years ago, it was a tough sell. Once people visited the state and got a taste of the tech ecosystem, the sale was much easier -- hence came the unwelcome moniker of Indiana as one of the best kept secrets in the country.

That’s no longer the case as the bloom is off the rose for congested, expensive and insular legacy tech hubs and businesses, as well as individuals who can work remotely are actively looking for better locales. I am thrilled  that the secret is out, and you should be, too.

Indications that this is true come from dozens of conversations I’ve had lately with company leaders new to the city, others exploring new opportunities, economic development leaders and in TechPoint’s tracking of tech investment activity.

By mid-April 2021, we had tracked more than $352 million in publicly announced investment raises by tech companies with significant Indiana operations. Compare that to 2019, our best year for tech investment, which totaled $358 million.  Then, consider that two new, tech-focused VC funds launched in 2021 with $112 million  are about to  rev up.

But there’s more:

• Indianapolis jumped 50 spots on Milken’s Best Performing Cities 2021 ranking, was listed by the Wall Street Journal as one of the four best cities to find a new job and ranked by Good Housekeeping as the best place for first-time homeowners.
• In the last year or so, Jobvite and Tangoe moved their national headquarters from San Mateo, Calif. and Parsippany, N.J., respectively  to Indianapolis, and companies like UGroup, (D.C.)  Wunderkind (NY) and Celigo (Bay Area) added Indianapolis offices, bringing more than 750 new jobs with them.
• That activity doesn’t even bring into consideration the growth among our pre-existing companies, which has been robust and includes a $240 million raise by Active Campaign, which is among those tech companies growing their Indiana presence and adding to our reputation as a SaaS innovator.
• Startup activity is strong, as well, with launches helped by High Alpha Venture Studio, two Techstars accelerators, gBeta and Elevate Ventures.
• Lastly, but certainly not least, the 2021 Indiana General Assembly adopted a budget that shores up investments in many state programs and initiatives and allocates more than $3B in federal stimulus dollars. Tech sector highlights:
• The Indiana 21st Century Research and Technology Fund (21 Fund) was increased by $3M per year and is now funded at $32.75M. This funding supports Elevate Ventures, the SBIR/STTR grant program and other IEDC-led tech initiatives.
• The cap on the popular Venture Capital Investment tax credit program was raised from $12.5M a year to $20M per year beginning in 2022, and the credit has been raised from 20% to 25% and to 30% for investments in minority and women-owned businesses.
• The Governor's new Regional Economic Acceleration and Development Initiative to encourage innovative policies that will spur population growth and economic expansion in Indiana communities has received $500M of federal stimulus dollars. It will invest in regional partnerships around projects to attract people and talent, employers and business opportunities to Indiana’s metro areas.
• The Next Level Connections Broadband Grant program received $250M in federal stimulus dollars (twice what was allocated in the previous budget).
• The budget appropriates $10M per year to the newly created Manufacturing Readiness Grant Program, which provides matching grants to companies for modernizing their operations or integrating smart technologies.
• It also allocates $200K per year for Promoted Industry Certification Exams which will help Hoosiers skill up in high demand fields, including IT and allocates $5M per year of federal stimulus dollars for Next Level Flights.

It’s safe to say the flywheel is spinning, but our work is not done; in fact, there is much to do.

One important issue the Indiana business community needs to rally around is the bipartisan Endless Frontier Act currently before Congress. Sponsored by our own Sen. Todd Young and Sen. Chuck Schumer, it includes targeted federal investments and development of new technology hubs like ours. Indiana is well positioned to exploit these investments through the collaborations among private, public, nonprofit, philanthropic organizations and universities that have resulted in huge advances in our most important economic sectors of advanced manufacturing & logistics, lifesciences, agtech, technology and emerging energy tech. A report commissioned by the Central Indiana Corporate Partnership found that as of 2019, Indiana has the nation’s third-highest rate of employment in these R&D and STEM-worker intensive industries.

Another important issue is the need to continually attract and retain top tech talent. Indiana is fortunate that the same collaboration that has enabled Indiana to become the Amateur Sports Capital of the World, is at play to grow talent. More than a quarter of a million students are being educated in a 3-hour radius of Indianapolis, tens of thousands at some of the top engineering and business schools in the country, including Purdue, IU, Notre Dame, University of Illinois - Champaign, and Rose-Hulman.

Too many of those students end up out-of-state. We’re pleased that our TechPoint Xtern and S.O.S. Challenge programs along with others like the Orr Fellowship and the Ascend network are helping retain some of those students. But, we need to do more to combat “brain drain” as well as to get more women and underrepresented communities into the tech community. That will include apprenticeship programs and companies willing to nurture this fresh talent so those students want to grow their careers here.

We’ve seen great companies like Salesforce, Infosys, UGroup, Jobvite, UKG, Wunderkind and Active Campaign grow their presence and/or move their headquarters to Indiana. They did that because they see the promise of our tech sector.

Let’s be more vocal about our attributes and less humble about what we have to offer. No more secrets.