The report starts with a general look at national venture capital trends, followed by an analysis of venture capital activity in the Great Lakes states of Minnesota, Wisconsin, Michigan, Illinois, Indiana, and Ohio. Finally, venture capital activity in Indiana is compared across different sectors, firms, stages, and Indiana regions.
2023 saw a significant decline in the number of deals across several investments and stages. The investment total dropped from $1.09 billion to $526.8 million, down a little more than half. This drop in deal growth is, in large part, the product of a higher interest rate environment, which makes riskier investments like venture capital less attractive from a risk-adjusted return basis.
PitchBook Data Inc. (PitchBook), a database of private capital markets including venture capital (VC), private equity (PE), and mergers & acquisitions (M&A) transactions, was the primary source of investment information used in this report. This database was used alongside Elevate Ventures’ proprietary deal information and secondary data collected from Elevate Ventures’ key co-investment partners.
In 2023, the landscape of venture capital underwent a significant transformation, largely influenced by the shifting economic environment characterized by rising interest rates.
The rise in interest rates marked a departure from the era of “easy money”, as investors sought safer havens for their capital, such as treasury bonds and savings accounts offering upwards of 5% returns. This shift in investor sentiment, coupled with the prevailing uncertainty in both private and public markets, has decreased investor risk appetite.
According to data from PitchBook, 38% of venture capital firms scaled back their deal-making activities in 2023, which is reflected in the change of deals completed and capital invested. The year 2022 witnessed 16,563 deals completed and $241 billion invested, compared to 2023, with 13,421 deals completed and $169.7 billion invested. This exhibits
the challenges faced by the industry. The situation was further exacerbated by significant layoffs at prominent firms like OpenView, highlighting the tumultuous nature of the market. Deal counts across both early to latestage ventures experienced declines in this environment.
Looking ahead, the future of the venture capital industry is characterized by uncertainty. The challenges posed by rising interest rates and market volatility require a flexible approach from both investors and entrepreneurs. While the allure of groundbreaking technologies like AI presents immense opportunities, it also underscores the importance of prudent investment strategies and thorough due diligence.
The year 2023 witnessed 13,421 deals completed and $169.7 billion invested.
Several states in the Great Lakes region experienced a decline both in number of deals and in dollars invested in 2023. Illinois, Ohio, and Minnesota led the way in the Great Lakes region, contributing 1.4%, 0.7%, and 0.7%, respectfully, of all the capital invested in venture in the U.S.
On a per-capita basis, Minesota, Illinois, and Indiana led the way with 28.7, 27.4, and 20.7 deals per million people, respectively. Similarly, in terms of the states’ GDP, Minesota, Illinois, and Indiana generated the most deals per billion in GDP.
2023 marked the biggest delta in deal count over the past decade. Coming from a record high deal count of 190, and over $1 billion in capital invested in 2022, 2023 proved to be a large downward shift, with only 141 deals completed and $526.8 million invested. The capital invested was reduced by a little more than half.
B2B SaaS remains a top sector for venture activities in Indiana, totaling over $262.1 million in 2023. The life sciences sector saw the second most capital invested, totaling $212.8 million.
Indiana continues to see primarily small, earlier-stage deals.
Central Indiana continues to make up most of the state’s venture capital activities. In 2023, the region generated 58.9% of all venture deals, representing 74.0% of dollars invested. Compared to other regions in the state, central Indiana’s venture ecosystem benefits from its large size, growing talent pool, and presence of entrepreneurs who have previously had successful exits.
Central: 74.0%
West Central: 7.1%
Northeast: 7.0%
Southwest: 4.4%
South: 4.3%
South Central: 1.9%
North Central: 0.9%
Northwest: 0.3%
East Central: 0.1%
Southeast: 0.00%
Central: 58.9%
South Central: 10.6%
West Central: 9.2%
North Central: 6.4%
Southwest: 4.3%
Northwest: 4.3%
Northeast: 3.5%
South: 2.1%
East Central: 0.7%
Southeast: 0.00%
In 2023, Indiana’s venture activity slowed with 141 reported deals, down from 190 in 2022 and 159 in 2021. Despite this, Indiana remained a significant player in the Great Lakes region venture capital scene. Total capital invested in Indiana also decreased from above $1 billion in 2022 to $526.8 million in 2023, with a focus on early-stage deals. B2B tech and life sciences sectors continued to attract the most capital. Central Indiana remained the primary hub for venture activity.
With its maturing infrastructure and expanding network of support, the state is poised to navigate the evolving landscape and sustain its momentum in nurturing innovative startups and driving entrepreneurial success into 2024 and beyond.
Despite the prevailing economic conditions, Elevate Ventures continues to invest in Indiana startup companies. Elevate committed $21.67 million across 112 Indiana startups in 2023.
Elevate Ventures’ total investment since inception surpassed $170 million for a total of $171.6 million invested in Indiana companies. The number of companies receiving investment from Elevate surpassed 500 for a total of 558. These investments have resulted in a total of over $2.3 billion in coinvestment for these Indiana companies.
Elevate Ventures has been recognized by Pitchbook as the #1 Most Active VC in the Great Lakes Region since 2017. Additionally, Elevate ranks as the 15th Most Active VC in the United States and the 16th Most Active VC in Angel & Seed in 2023.
112 Deals in 2023
$21.7M Committed Capital in 2023
558 Indiana Startups Funded
# 15
Most active VC in the U.S.
Elevate invests in cross-sector innovation-driven enterprises through our core pillars of Community, Capital and Acceleration. As the #1 seed and early-stage venture capital firm in the Great Lakes Region and Top 20 in the World, we are building a robust innovation ecosystem with companies, customers and mission-critical partners that fuel founders.
BY THE NUMBERS - SINCE 2011558 Indiana startups have received funding from Elevate
$171.6 M
Total Invested
$2.3B Leveraged from other capital sources
12.81X Leverage Ratio
4,141 Indiana Companies Have Leveraged Elevate Resources
74% of Companies Receive Follow-On Funding (Of those Elevate invests
2,975 Investors in Elevate’s Network
$92K
Average salary for people employed by our portfolio companies in 2023.