Reinvestment rockets Indianapolis’ rise in tech | Crain's Indianapolis

Reinvestment rockets Indianapolis’ rise in tech

Haley Altman is the co-founder of Indianapolis-based Doxly, which produces software that helps lawyers manage legal approvals and reduce other administrative burdens. | Photo courtesy of Doxly.

Indianapolis’ skyline heralded it had arrived as a titan in marketing tech last April, when 17-foot tall letters of Salesforce.com replaced those of Chase atop a 48-story office tower.

San Francisco-based Salesforce only a few years earlier bought Indianapolis-born ExactTarget for $2.5 billion, burnishing a Silicon Valley-on-the-prairie reputation for a Midwest city long known for manufacturing, insurance and banking.

Though typecast as a tech hub for marketing and call center software, Indianapolis now has hundreds of tech firms in a variety of flavors. They’ve been fueled by the sale of companies like ExactTarget, whose executives stuck around and reinvested the proceeds to launch and back startups here.

And some of these new firms, such as marketing software developers DemandJump and SmarterHQ, are applying the kind of tech that made Silicon Valley famous, including artificial intelligence and machine learning. Another of these is Quantifi, led by former ExactTarget executive R.J. Talyor. Quantifi uses AI in a marketing R&D platform for digital ads to give customers insight into the best marketing strategy.

Yet, even 15 years ago, few would have thought of launching a tech company in Indianapolis, Talyor recalled. Indeed, when former Mayor Steve Goldsmith in the mid-1990s announced a task force to turn Indy into a veritable Silicon Valley, some laughed.

Talyor remembers the days earlier in his career when finding investors from the tech coasts was difficult. “It used to be something you sort of mumbled: ‘I’m from Indianapolis,’” he recalled.

From preposterous to possible

Now Indianapolis is a selling point.

“We can hire software engineers who are more loyal and less expensive than in Silicon Valley,” said Talyor, whose firm recently completed a $2.3 million funding found led by Indianapolis-based venture studio High Alpha.

Talyor also credits the state’s universities. Purdue University, Indiana University, Ball State University, Rose-Hulman Institute of Technology and others have spun-out companies and talent.  

These days, it’s hard to track of the number of tech firms in the metro area. Central Indiana’s technology initiative TechPoint estimates there are at least 460 tech firms statewide employing around 115,000 people. About 55 percent of those live in central Indiana.

As recently as 2006, “there really wasn’t a large tech presence,” said Haley Altman, co-founder of Indianapolis-based Doxly. One of the High Alpha portfolio companies, Doxly produces software that helps lawyers manage legal approvals and reduce other administrative burdens.

That year, Altman, an attorney, started work at Indianapolis law firm Ice Miller, where many of her customers were in the life sciences field or in non-tech sectors, she said. The following year she left for a law firm in Silicon Valley. When she returned to Indianapolis in 2010, the growth in Indianapolis’ tech scene “was amazing,” Altman recalled.

There weren’t just more companies but a strong support network from groups such as TechPoint, which has provided fellowships and training, Altman said. She also points to groups such as Verge, which help techies network and rub elbows with investors. “Even in 2010 you saw such a difference,” Altman said.

“All the meet-ups are really active right now,” said Talyor, adding that the city’s critical mass of tech companies is even luring back some who left the state for jobs on the tech coasts.

TechPoint’s communications chief, Sara Croft, rattles off a list of people who returned here from jobs in Boston or in Chicago. “We are getting more and more inquiries about job opportunities” here, Croft added.

Talyor has also noticed the so-called boomerang effect. He credits efforts such as TechPoint’s Indy Tech Fellowship program, which puts college students to work at local tech companies.

Virtuous cycle

Perhaps more than anything, tech veterans credit a cycle of reinvestment by accomplished tech entrepreneurs who go on to sell their tech companies and then re-invest capital back into central Indiana.

In 1988, Indianapolis tech entrepreneur Don Brown co-founded the help-desk software firm Software Artistry. Seven years later Software Artistry became the state’s first publicly traded software company. And in 1997 it was bought by IBM, for $200 million.

Brown and fellow executives later went on to launch other software firms here, including Interactive Intelligence, a maker of call center software purchased last year by California-based Genesys for $1.4 billion.

“You see these people who have had that amazing success. But they’re not done and moving to an island,” said Altman. “It’s just this sense of community.”

That virtuous cycle continued when ExactTarget sold.

Former ExactTarget top executives Scott Dorsey and Scott McCorkle helped form High Alpha, which has a portfolio of at least nine companies and counting.

Not all new startups in Indianapolis are marketing-tech related. They include employee engagement firm Structural, whose software does things such as pulling-in demographic data from human resources systems and payroll. Or Perceivant, which produces online courseware used by dozens of top universities.

In the first quarter, nine Indiana tech firms attracted $25 million in venture capital, according to a report by PricewaterhouseCoopers/CB Insight. In 2016 there were 23 deals that generated $51.5 million.

Recent deals included Quantifi last month raising $2.3 million from High Alpha Capital, Router Ventures and several angel and private investors.

Awakening ambitions

One thing that exposure to broader sources of capital has taught Indianapolis’ tech community is a greater imagination for—and expectation of—growth potential.  Whereas a company might previously have set goals to only grow so much in a given period, investors often bring to bear higher expectations for company growth, Talyor said.

“It’s like, wow, we can think bigger,” Talyor said. “It’s really led to entrepreneurs like myself thinking that we can be bigger and bolder and be a place where artificial intelligence is developed.”

July 17, 2017 - 2:02pm