Why All Indy Startups Are Local
A case for using local ingredients in Indy’s startup companies.
Local startups love to go national. The Indianapolis tech community welcomes attention from the outside world. TechCrunch headlines and house calls from coastal venture capitalists aren’t that common in flyover country, so when it happens, one can only imagine it’s easy to see the appeal. Big-tech media and money can provide more than hype, too—a well respected tech blogger’s post can catch the eye of potential customers and employees alike. Prominent out-of-state investment firms carry risk capital and years of experience that local startups crave.
But there’s a terrific irony at the heart of this city’s tech-scene surge. The more the national light shines on Indy startups, the more important it is that these companies achieve their most meaningful growth with local ingredients.
People are a huge part of this equation. To raise money, many of the city’s software startups first decide to make it. Earning real revenue often requires finding employees to help solve valuable problems. And there’s no long line of unemployed, talented tech managers around to pluck them from, like there is on the coasts. So where do leaders of the young companies of the Circle City find their first hires? The old tech titans offer options. After acquisitions (i.e. the sales of ExactTarget, Aprimo, and Compendium) or in the years following a public offering (see Angie’s List and Interactive Intelligence), it’s inevitable that a chunk of well trained employees will leave.
It’s a great sign that the local tech ecosystem continues to produce options for talented people. It adds reasons for them to stay in the city. Local startups rely on employee churn from other companies, as it’s much easier to recruit people already here than uproot experience from the coasts. Todd Richardson, the former executive vice president of administration at ExactTarget, who now serves as the chief people officer at Bluebridge, is a great example of the vital hires that fast-growing tech companies make to keep accelerating.
Experience is a nice thing to avoid importing, too. Young CEOs need mentors who have sat in the captain’s chair and successfully steadied the ship. Out-of-town venture-capital firms offer board members as startup coaches after fundraising rounds. But local leaders need help earlier in the process. Former tech CEOs like Scott Dorsey, Bill Godfrey, and Bill Oesterle—to name a few—are all offering assistance now, putting time and money into developing the next set of tech successes. Advice and reassurance are tools best kept close by when the inevitable doubts of startup life creep into a founder’s mind. Today’s tech executives can make quick trips to their mentors’ offices to pick their brains, which is a luxury few of their predecessors enjoyed.
The trailblazers of Indy’s tech scene in the early 2000s also had a much harder case to make for seed investments in the uncertain days at the start of the Web 2.0 era. Pitching a startup often meant unsuccessful trips down Sand Hill Road in Silicon Valley. Options create opportunities in early-stage tech financing, and several new choices have arrived. The new crop of angel investors from Indianapolis’s tech exits are making bets on young companies. Chicago-based Hyde Park Venture Partners opened an Indianapolis office last year. High Alpha added a startup accelerator option as well as an early-stage fund. Match that with the existing Elevate Ventures and Allos Ventures, and it’s easy to see the rapid growth of available cash in the local startup community.
As Indianapolis’s new generation of innovative companies matures, tech leaders will look outside the state for assistance, like Lesson.ly, which used Boston-based OpenView (previously an investor in ExactTarget) to lead its $5 million fundraising round last month. But the local momentum in Indy’s effort to become a tech city is adding necessary elements to startup success. And that’s key. Just like politics, all startups are local.