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Jim JayIndiana is earning the confidence of entrepreneurs and investors as a hospitable place to launch new ventures, so says a California-based think tank that is lauding Indiana’s progress in financing new companies.

On Jan. 25, the Milken Institute released its 2010 State Science and Technology Index, which ranks states according to various measures of high-tech economic growth. Indiana was among the biggest gainers from the 2008 Index, moving up five spots from 33rd to 28th. Our biggest improvement came in the “Risk Capital and Entrepreneurial Infrastructure” category, where the report’s authors wrote:

“Indiana’s gains are across several categories, but the risk capital and entrepreneurial infrastructure component is responsible for the bulk of its overall advance from 33rd to 28th this year. Indiana vaulted from 37th in 2008 to 19th in that category, and ranked fourth in venture capital growth this year, gaining ground in both venture capital relative to GSP (from 26th to 17th) and business start-up rates (also 26th to 17th).”

Considering that all net job creation in today’s economy comes from small entrepreneurial companies, this is great news for Hoosiers. For too long, Indiana languished as “flyover country” for venture capitalists, limiting our ability to grow an entrepreneurial economy. Obviously, things are changing for the better.

But we can’t afford to be passive observers of these trends. We have to find new ways to encourage and accelerate them. That’s why TechPoint supports House Bill 1008, which extends the state tax credit for venture capital investments until 2015 and increases the available credit from $500,000 to $1 million.

The fact that our venture boom happened despite the economic downturn shows tremendous potential for future growth. A recent Kauffman Foundation study found that more than half of the companies on today’s Fortune 500 list were launched during an economic recession or severe bear market. We’re seeing the same sort of momentum with venture-backed companies like ExactTarget and EnerDel creating hundreds of new jobs in Central Indiana.

Now isn’t the time to take these gains for granted. Raising the venture capital tax credit will help maintain this progress and encourage investors to keep betting on Indiana innovations.