Technology Services Indiana

Optimism in technology sector makes headlines

Monday, February 7, 2011 by Joshua Hall

The top story for today's news cycle is good news for the Indiana technology sector. Results from a survey of 4,000 business professionals throughout the state indicate that technology business trends are on the minds of many, and for all the right reasons.

The Indiana Business Council survey, conducted through a partnership between Inside Indiana Business and Indianapolis-based Walker, revealed that tech companies expect customers to spend more in 2011 and that they plan to hire new employees to meet the increased demand of technology sector growth.

79% expect customers to increase spending in 2011
54% plan to add jobs in 2011 (which is much higher than overall expectations)
85% feel there will increased need for their technology products and services in 2011

In an interview on Inside Indiana Business with Gerry Dick, Slingshot SEO President Kevin Bailey said that more availability of funding and an increased focus on sales were both important, but that he believes innovation is the key to success for Indiana's technology sector.

"At Slingshot we are always trying to focus on, we gotta have something great to sell," Bailey said. "Being innovative I think is, for my company, always first and foremost. We want to have the most innovative product in search engine optimization for enterprise companies, so with that innovation we have something great to sell. So I would still put innovation at the top of my list but sales is right there under that because obviously sales drives growth."

Indiana's tech sector has good reasons to be optimistic as the economy continues its climb out of recession because of its performance during the recession. Even during the height of the global recession, Indiana GAINED 1,200 new tech jobs, according to TechAmerica's Cyberstates report.

Investors are also betting on the Indiana tech sector and emerging business technology coming out of Hoosier companies. While venture capital nationally was at a 10-year low during the recession, Indiana grew venture investment by double digits, including a 70% leap in 2008.

During the interview on Inside Indiana Business, Kevin Bailey said that Indiana has great leaders that mentor startups and that the culture of Indiana's tech sector is collaborative and helpful to small technology businesses.

The Tech Rush In Indiana

Thursday, January 27, 2011 by Community Blogger

We started 2011 with news around the proverbial water cooler focused on Facebook's $50 billion valuation. According to the Associated Press, the social networking site's value is about equal to the open market value of more well-established companies like Boeing and Kraft. The terms of the private offering of as much as $1.5 billion in shares of Facebook have changed as Goldman Sachs Group Inc., recently announced that it was restricting the offering of Facebook shares to non-U.S. citizens due to concerns that the media spotlight surrounding the private offering might violate U.S. securities laws and expose the firm to legal action. While the terms of the Facebook deal continue to evolve, there is little doubt that companies in the tech sector will continue to make front page headlines in 2011.

Recently, we've seen a number of Indiana's tech companies rise in prominence. In fact, in December 2010, Lead411 announced its list of the Technology 500. To be eligible, companies must be privately held, headquartered in the U.S. with over $1 million in revenue in 2009. The rankings were determined by calculating the highest percentage revenue growth between 2007 and 2009. Seven Indiana companies made the list to include Scale Computing (ranking an impressive second overall), BlueLock, Vontoo, Iasta, ExactTarget, Angie's List and Delivra.

So, what makes the Crossroads of America so attractive to emerging tech companies and what drives their growth? Some of the contributing factors are: access to capital, competitive tax credits/incentives and a commitment to develop and commercialize advanced technologies in Indiana.

Access to Capital

The Facebook deal redefined "alternative financing strategies." The cash infusion from Goldman Sachs enabled Facebook to delay an initial public stock offering (and the heightened scrutiny and regulation that comes along with it) while simultaneously allowing it to make valuable improvements in its technology. Capital is the key component to success for emerging and entrepreneurial companies looking to grow and gain market share.

Today, private companies in Indiana have a variety of resources in the financing arena available to them. A number of angel investor groups consisting of current and former entrepreneurs have come to fruition and are looking to make investments in early stage technology companies. In addition, Indiana has a broad representation of private equity funds focused on investing in areas such as technology, health care and life sciences. The banks are also starting to get back into the game with Small Business Administration-backed loans for smaller companies.

Competitive Tax Credits/Incentives

The leadership in Indiana has also recognized the importance of creating new jobs for Hoosiers through the development and growth of entrepreneurial companies by supporting their growth from small start-up companies to significant employers within our state's economy. It has become more expensive and competitive for the state to incentivize companies to move their businesses to Indiana. As such, Indiana has focused on fostering an entrepreneurial culture where individuals are encouraged to start businesses which leverage the talents and strengths that are already inherent in the state's economy as well as the current workforce. One such method used by the state is the Indiana Venture Capital Tax Credit, which provides a tax credit for investors making an investment in privately held companies in Indiana. In addition, the Indiana Research and Development Tax Credit provides a tax credit for certain expenses spent on research and development. These tax credits were designed to encourage investors to provide capital to emerging growth companies and the activities that may be conducted by them.

Commitment to Develop and Commercialize Advanced Technologies

Government, business and education leaders within the state are committed to working together to foster an "entrepreneurial friendly environment." Programs like the state's 21st Century Research and Technology Fund were created in an effort to diversify the state's economy by focusing on developing and commercializing advanced technologies. According to research by Ball State University, the 21st Century Fund has given 188 awards of $238.5 million spread across 10 rounds. Award amounts experienced a few peaks and valleys until Round 6, peaking in Round 7 then gradually declining.

Programs like TechPoint's HALO Capital Group also provide funding opportunities for early stage companies. The group, comprised of over 20 former and current executives, assists with investments between $250,000 to $2 million.

The tech rush in Indiana has already begun. Fortunately, the state is well-armed and eager to attract the next generation of entrepreneurs. If you think you can wait another 10 years to bring that great idea to market, think again. A decade is a millennium in tech time. Just ask Mark Zuckerberg.

If you have questions regarding Ice Miller's entrepreneurial services please contact Kristine C. Danz. Danz is a partner in the Firm's Business Group. She focuses her practice on entrepreneurial legal issues, start-up commercialization, private equity/venture capital financing transactions, and mergers and acquisitions.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.

Name: Kristine Danz
Company: Ice Miller LLP
E-mail: kristine.danz@icemiller.com
City: Indianapolis
State: IN

Kristine Danz is a partner in Ice Miller's Business Group. She focuses her practice on entrepreneurial legal issues, start-up commercialization, private equity/venture capital financing transactions, and mergers and acquisitions.

Funding Law - Know Your IRR

Tuesday, January 25, 2011 by Community Blogger

It has been said a million times already on this blog -- a CEO, especially one which is seeking funds from private equity investors, needs to understand finance. Often a basic knowledge of sources and uses and cash flow analysis is enough, but in many early stage investment rounds, savvy investors expect the CEO to know the company's internal rate of return (IRR) - and why it matters.

I meet many entrepreneurs from the Indiana tech sector and beyond who have served as VPs or middle managers before embarking on their entrepreneurial dream. There is a key difference between the way a VP or manager looks at finance and the way a CEO looks at finance: VPs look at margins; CEOs look at cash flows.

The IRR is the time-weighted rate of return of future cash flows. More specifically it is the NPV of invested dollars, distributions to owners and unrealized investments. This is a key tool in valuing companies and for investors to determine the expected return of their investment. Venture capitalists and private equity firms understand IRR well - and most will use a discounted cash flow method (utilizing an IRR) to value companies in considering investment opportunities.

Attorney David Castor concentrates his practice on advising and serving Indiana information technology companies and broad-based other businesses and their owners through their legal matters including Indiana technology trends. Mr. Castor’s practice is focused largely on Indiana technology services, representing SaaS and Internet based companies as general counsel.

Name: David Castor
Company: Alerding Castor Hewitt LLP
E-mail: dcastor@alerdingcastor.com
City: Indianapolis
State: Indiana

TechPoint Launches Indiana Measured Marketing Initiative

Tuesday, September 21, 2010 by Joshua Hall

Today, TechPoint, with support from the Indiana Economic Development Corporation (IEDC) and Ball State University's Center for Media Design, announced Indiana’s Measured Marketing Initiative, a national media relations campaign to position Indiana as the leader of a fast-growing, emerging technology business category that TechPoint has coined as “measured marketing.” The goal for this initiative is to raise awareness, generate customers for existing businesses and attract companies to create jobs and investments in Indiana.

There are more than 70 measured marketing companies in the state of Indiana. Measured marketing companies provide a platform or service for digital marketing via email, social media, search, video, mobile and other rapidly evolving technologies, and they provide clients with return-on-investment tracking.

With its technology-related tax credits and exemptions, access to major research universities, and very reasonable costs of living, Indiana has been a great home for technology businesses, and we are excited to see more companies do business in Indiana.

For more information on Indiana’s Measured Marketing Initiative, please go to www.indianameasuredmarketing.com.

Mira Awards Ceremony Video, Chairman's Perspective

Thursday, June 17, 2010 by Joshua Hall

Mira Awards Celebrate Tech Sector’s Progress During Economic Turmoil
by Mark Hill

Last month, more than 600 of Indiana’s technology executives, opinion leaders and policymakers, educators and economic developers gathered at the annual TechPoint Mira Awards gala in downtown Indianapolis to celebrate more Hoosier high-tech success stories.

For more than a decade, the Mira Awards have recognized the companies, institutions and individuals who make up Indiana’s thriving technology community. This year’s winners provide ample optimism about our future as a high-tech economy:

They show that technological innovation is a catalyst for growth in every industry, not just IT. The Mira Innovation of the Year award winner is OrthoX, a life sciences company that’s developed an exceptionally strong material to anchor artificial joints to bones (Indiana firms account for more than a third of global orthopedic device sales). In Indiana’s largest industry, manufacturing, new technologies are also bringing new opportunities – the advanced manufacturing Mira award went to EnerDel, the fast-growing maker of high-tech batteries for electric vehicles.

Exact Target is a repeat winner in the Information Technology Mira category, continuing to lead the way as Central Indiana establishes itself as a hub for online marketing. Along with Exact Target, our region is called home by companies like Aprimo, Compendium Blogware, 5 Buckets, Lights Out Intelligence, Market Path, Cantaloupe, Delivera and Formstack. These firms are taking advantage of a titanic market shift that has seen the traditional media sector lose 32% of its market value from 2003 to 2008 while new media (online content and services) gained 102%.

Our Mira winners provide a cross-section of our most innovative companies in areas that represent promising market opportunities. It’s important that we celebrate their success. But the message behind this year’s Miras goes beyond a (well-deserved) pat on the back for the winners. The bigger picture is that that the state’s tech sector continued to grow and build momentum even during the tough times.

This year, TechPoint attracted a record number of Mira nominations. The previous high-water mark was set last year, and before that in 2008. Even during the worst of the national recession, this program generated steadily more and more interest and enthusiasm.

Less anecdotally, the latest Cyberstates report from the TechAmerica Foundation shows that Indiana continued to add tech jobs during the downturn, even as the rest of the private sector was making cuts.

Investors are also betting on Indiana’s high-tech entrepreneurs. Last year was the worst year for venture capital nationally in more than a decade. But in Indiana, we grew our total venture investment by nearly 70% over 2008 – and 2008 beat 2007 by 40%. I’m proud that the HALO Capital Group managed by TechPoint has added nearly $14 million in seed capital since 2008 to help further this trend.

Indiana’s technology sector has weathered the economic storms, and seems to have emerged stronger than ever. A recent Kauffman Foundation study that found that more than half of the companies on today’s Fortune 500 list were launched during an economic recession or severe bear market. This bodes well for the Mira winners of the last few years, and for our technology industry as a whole – as the economy continues to recover, tech companies will be leading the way.

TechPoint is working to help keep the momentum going. From improving connectivity in the tech community, improving access to capital and entrepreneurial expertise, and fighting for pro-growth policies at the Statehouse, we’re committed to creating a climate that produces even more success stories like those feted at Saturday’s Mira gala. Learn more about TechPoint’s efforts and the Mira Awards program (including a full roster of 2010 winners) at www.TechPoint.org.

Mark Hill is Managing Partner of Collina Ventures and chairman of TechPoint. He also serves on the Board of Directors of the Central Indiana Corporate Partnership.

Indiana Companies Continue to Raise Capital, Approaching $205 Million

Tuesday, January 5, 2010 by Joshua Hall

With the announcement yesterday that mobile answer service Cha Cha has raised another $7 million in its latest round of funding that closed in December, the state of Indiana's venture capital funding total for 2009 is rapidly approaching $205 million.

That number is based on $128 million confirmed for the first three quarters of 2009 by the National Venture Capital Association (NVCA), and adding up those deals we know about from the fourth quarter, including Cha Cha.

Of course, for those of you keeping score, you know that ExactTarget alone raised $145 million in 2009 -- $70 million in May and another $75 million in December.

Securing venture capital during a time of economic expansion is not easy. Securing venture capital during a recession -- the greatest economic decline since the Great Depression -- is considered a monumental task, even by optimistic experts.

Indiana companies, however, were able to increase the state's venture capital funding by a whopping 78 percent, compared to the $115 million secured in 2008, as reported by the NVCA.

Also, it's worth noting that the numbers reported by the NVCA do not include angel investments, such as the $12.6 million invested by HALO Capital Group in Nico Neuro and Spine; BidPal Network, LLC; Oxygen Education LLC; Weblink International; Genitor Therapeutics, Inc.; and others.

Here's the question of the day:

What is it about Indiana companies (particularly Indiana technology companies) that are making them more attractive to venture capitalists?

Leave your answer(s) in the comments section and please remember to use the Share feature to Tweet this blog to your friends or share it on Facebook, etc.

Indiana's ExactTarget Among Fastest Growing Tech Companies

Tuesday, October 20, 2009 by Jim Jay

Congratulations to the team at ExactTarget for being recognized by Deloitte as one of the fastest growing tech companies in the country.

Here's a snapshot from the announcement:

INDIANAPOLIS--(Business Wire)-- Deloitte LLP announced today that ExactTarget ranked number 254 on the Technology Fast 500, the ranking of the 500 fastest growing technology, media, telecommunications, life sciences and clean technology companies in North America.

Based on percentage of revenue growth from 2004-2008, Technology Fast 500 named ExactTarget to the list for its 524 percent revenue growth during the five-year period.

"Our consistent growth and innovation continues to provide marketers the most reliable and sophisticated platform to connect with their clients and drive real ROI," said Scott Dorsey, ExactTarget`s chief executive officer and co-founder. "While I am incredibly proud of the ExactTarget team for their work to achieve five years of continuous growth, the real credit goes to the tens of thousands of marketers who use our platform to drive business results. Without them, none of this would be possible."

Overall, Technology Fast 500 2009 award winners logged growth rates ranging from 212 to 146,050 percent over five years, with an average growth rate of 2,486 percent.

"With its impressive five-year growth, ExactTarget has earned its position among the fastest growing technology, media, telecommunications, life sciences and clean technology companies in North America," said Mark Jensen, Managing Partner, Technology and Venture Capital Services, Deloitte & Touche LLP. "Deloitte is proud to honor ExactTarget for its achievement."