A Chicago micro venture capital fund gave Fort Wayne something extra to cheer during its Startup Week entrepreneurship celebration Oct. 14-18 when it moved the city up in a ranking of the Midwest’s 54 best entrepreneurial ecosystems.
Victor Gutwein, managing director of M25 Group, shared the 2019 version of the annual ranking Oct. 1. It had Fort Wayne in 29th place, up from 30th.
M25 uses the ranking to help prioritize where it spends its time looking for tech startup investment opportunities. A methodology explanation identified the major criteria used for the ranking as startup activity, access to resources, and business climate.
Startup activity measures a city’s tech community founding activity partly by looking at its startup success rate as well as its number of startups. The criterion includes an evaluation of the size and quality of the network available for the support of a startup.
The resources criterion measures the quality of talent, level of investor activity, the amount of public and private support available to startups, and other assets they can access for growth.
The business climate criterion measured how an area economy could contribute to the growth of new and emerging companies and included factors such as its population, cost of living and gross domestic product per capita.
Fort Wayne fared 13th best out of all the cities in the business climate ranking, but that was two places behind its 2018 rank for the criterion. It moved up to 30th from 36th in access to resources and up to 35th from 36th in startup activity.
Data sources used for the rankings included the U.S. Census, the Seed Accelerator Rankings Project and Pitchbook research on venture capital fund and startup activity. Resources and startup activity are weighted twice as heavily as business climate.
Fort Wayne fell in the business climate ranking because its labor costs increased relative to other cities, Gutwein said in an email.
The city’s startup activity ranking improved because Pitchbook “recorded the relative number of startups and density of startups increased year over year,” he said.
Fort Wayne moved up in the resources criterion because Pitchbook also recorded more venture capital activity, he said. M25 saw state-level government resources improvement when Indiana made angel tax credits transferrable beyond the state’s borders and its Next Level Fund started making targeted investments in Indiana venture capital funds.
In northeast Indiana, “I have seen a lot of community members and economic development groups like Elevate and Farnsworth Fund trying to leverage Fort Wayne’s natural advantages (in) manufacturing — especially aerospace — and orthopedic innovation,” Gutwein said.
Information posted about the latest ranking on M25’s website noted that Indianapolis moved up to 4th place from 5th to overtake St. Louis.
“If a larger ecosystem like Indianapolis is improving, it is much more likely to pull top-level talent, venture capital and other valuable forms of attention on a national level,” Gutwein said.
“When this happens, cities around the state do get more publicity and access as well — for example they can and do participate in events with national pull like Techpoint’s Investor Speed-dating or the Kinetic Conference, based in Indianapolis but open to all Hoosier startups,” he said.
The Farnsworth Fund has become the Fortitude Fund and its program manager, Steve Franks, said close startup community connections make the success of Indianapolis important to northeast Indiana.
Some of the new entrepreneurial resources in Fort Wayne come through the Indiana Economic Development Corp. and state-funded Elevate Ventures, which also benefit Indianapolis. “We’re more highly connected to Indianapolis than any other startup community,” Franks said.
Some investment groups with an Indianapolis presence are spending more time in the Fort Wayne area searching for investment opportunities, he said.
Startup Week will present an excellent opportunity to meet with area entrepreneurs, and at least one Indianapolis venture capital firm will have a representative in Fort Wayne taking advantage of that, he said.
New entrepreneurial service organizations have emerged in Fort Wayne in recent years and existing ESOs have added important programs, both of which have helped the city’s M25 resources ranking, Franks said.
“Part of what you see going on here right now is a strong collaboration among entrepreneurial service providers,” he said. “It came together in the recently published FuseNEI.com website, which is a front door to the resources that are available.”
Events such as Startup Week help strengthen the region’s entrepreneurial ecosystem through workshops and events that help entrepreneurs grow and connect with one another and also showcase their success, Franks said.
When it comes to M25’s annual ranking, “my aspirations are that we climb more than one place next time,” he said.
“My aspirations are that we’re still punching above our class and building the infrastructure to carry us even farther up in M25’s list,” he said. “You haven’t seen the last of us yet.”