Last month, M25, a Midwest-focused VC with offices in both Indiana and Illinois, released its “Best of the Midwest Report”, ranking the 50+ startup metropolitan regions in the Midwest. Here, Victor Gutwein, Managing Director of M25, takes on a SWOT analysis to discuss Indiana’s performance in relation to a broader, regional context.

One of the obvious takeaways from our first major Best of the Midwest Report is that Indiana performed well as a whole, and as my M25 colleague Mike Asem put it: “looks built to last.”


Everytime I drive between Chicago and Indiana, I have to chuckle at the “A State That Works” billboard campaign, because it hits right on the money. Indiana has a great tax environment for business, and the government seems to understand the value of tech, with impressive resources ranging from a solid tax credit program, a very active direct investing VC firm and a newly-announced fund-of-funds to stimulate VC activity. Indiana’s cost of living and labor costs are both very healthy as well, leading to strong performance in the “Economics & Demographics” category.

Indiana Economic Development Corporation’s “A State That Works” advertising campaign.

Another aspect not to be overlooked is the distribution of ecosystems across the state, led by the 3 primary high-ranking college-towns of Lafayette, South Bend and Bloomington. Most states would be happy with one of these communities, which both spin up their own startups and feed talent and ideas to the capital.


Indiana’s startups are starving for capital, ranking very low in all core non-government funding vehicles: angel groups, accelerators and VCs. This could be for several reasons:

  1. Along with traditional coastal stigmas against investing in the Midwest, regional heavyweights Illinois, Ohio and Michigan could be creating a “flyover-of-the-flyover states” vacuum for traveling VCs
  2. High-net-worth individuals in Indiana could even be less exposed and more fiscally conservative than the region’s average, preventing many from becoming active angel investors
  3. Most neighboring states have attracted funds to invest and even open offices in their states by directly investing in those funds


Attracting a top-tier accelerator to Indianapolis, as one successful regional program recently hinted, would keep rising stars here and attract talented startups globally to lay down roots.

As I already mentioned, Indiana’s Next Level fund could both pull great VCs into the Hoosier state’s tech scene as well as help seed home-grown investors with strong local ties that want to put more capital to work.

And it should be apparent, but continuing efforts to weave the valuable resources around the state (and not just in the capital) will be critical to maximizing Indiana’s attractiveness. Programs like the Indiana Coworking Passport are a great example of pulling together distributed resources in a state that can’t rely on any single city.


State governments poaching companies across borders, of which Indiana likely has a net positive score, can always go the other way if other governments get savvy. And a stubborn insistence by many VCs that talented tech startups can only grow effectively in a few coastal hubs could pull capital-starved scaling companies away. But honestly, some of the biggest threats to Indiana’s continued tech growth could come from within. Cooperation and collaboration on a host of initiatives has been a bright spot, enabling the state to pour resources into the community. But factionalism and territorialism can hurt many communities – whether between Indianapolis and the northern suburbs, central Indiana against college-towns and industrial centers in the corners, or even Indiana facing off against regional rivals. I’ve seen some damaging rhetoric, and want to stress the biggest successes will come from a “rising tide” approach rather than zero-sum.

Learn more about the M25 ranking methodology and be sure to check out the original “Best of the Midwest Report.”

Click Here to open a larger version of this simplified Instagram infographic.

About the Author

Victor Gutwein, born and raised in Rensselaer and West Lafayette, IN, is the founder and managing director of M25 Group, one of the most active early-stage investors in the Midwest. Since launching M25 in 2015, he has invested in 9 Hoosier startups across Indianapolis, Bloomington and West Lafayette, and was a 2017 Mira Award Nominee for ‘Rising Star’.