Indianapolis: An Unlikely Hotbed Of B2B Tech Startups?

Salesforce’s $2.5 billion acquisition of email marketing startup ExactTarget in 2013 was a big deal. And for Indianapolis, it may have also catalyzed a burgeoning startup scene.

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A number of former ExactTarget and Salesforce executives have gone on to start companies in the midwest city ExactTarget considered home. Former ExactTarget Co-Founder and CEO Scott Dorsey also launched a venture fund in the city as well.

In 2015, Dorsey launched High Alpha, a venture fund focused on investing in enterprise cloud companies that has already invested in more than two dozen startups. Another co-founder, Chris Baggott, started ClusterTruck, a fresh food delivery company in the city, the same year.

Ryan Ziegler, a general partner of Princeton, N.J.-based Edison Partners, believes the Midwestern city has great potential—so much so that his firm announced it had led investments in two Indianapolis-based startups (more about those later) this past week alone. The Midwest is  a region he views as “underserved and emerging.”

“Indianapolis has a very vibrant set of generational entrepreneurs giving back by mentoring and investing in emerging startup companies,” he told Crunchbase News. ”Plus, the state has stepped up in a supporting a lot of initiatives for favorable tax treatments, and is also investing in companies doing business in the state.”

The central location, lower cost of living, and ability to hire talent for less money than other markets also makes the city appealing to founders and investors alike, Ziegler added.

“You can find direct flights to almost anywhere out of the Indianapolis airport,” he said. “And a recent study found that the city has one of the top five lowest rent to tech wage ratios. It’s a place where you can build a company capital efficiently. All these factors make for pretty interesting ingredients to build great companies, particular B2B tech companies.”

Indeed, in 2017, Inc. named Indianapolis as one of the “Top 6 Best Cities to Start a Business Right Now.” And in 2015, Fast Company ranked Indianapolis in its “Next Top 10 Cities for Tech Jobs.” And more recently, it named the city the tenth best for women in tech.

Outside The Valley

Edison Partners, which describes itself as a growth equity firm that invests in underserved markets and bootstrapped entrepreneurs, led financing rounds for two Indianapolis startups: Sigstr, a SaaS platform for employee email signature marketing and relationship intelligence, and Emplify, an employee engagement measurement company.

It put $2.35 million of a $4 million growth round in Sigstr, which the company will use to accelerate the rollout its newly released Pulse product and to scale sales and marketing. Sigstr has raised $11 million in funding since inception.

Edison also put $3.5 million in a $7.5 million growth round in Emplify. The startup plans to use the injection of capital toward investing in engineering and developing a go to market strategy for its products. Cultivation Capital and Allos Ventures also put money in that round. The company has raised $10.5 million since it was founded in 2016.

Founded in 2014, Sigstr has 60 employees and nearly tripled its revenue growth and customer base over the last year. The company expects to grow an additional 150 percent in the fiscal year ending January 2019. It now works directly with 400 B2B companies across five continents, including Amazon, AT&T, Experian, GoHealth, and Snowflake Computing.

“Every company in the world runs an employee email system, with billions of emails being sent every day,” Bryan Wade, CEO of Sigstr, told Crunchbase News. “We saw a massive marketing opportunity to take over email signatures with every employee.”

For Wade—who formerly served as vice president of email product for ExactTarget, and as senior vice president and chief product officer for Salesforce—Sigstr’s ability to attract companies in any industry is a big advantage.

“There’s a lot of vertical and niche products out there, but it’s difficult to find a technology like this that every business in the world can use,” he said.

In July, Sigstr launched its new Pulse relationship marketing application that uses artificial intelligence to map and quantify the collective networks of all employees to better identify recipients, and send more targeted invitations and missives to appropriate customers and prospects.

“There’s so much potential for organizations to use relationship intelligence from employee email to unlock relationships and drive targeted marketing and sales efforts. Employee email is still the best predictor of business relationships,” Wade said.

Ziegler agreed.

“We found that the use of relationship data to inform account-based marketing at the B2B level was sorely missing,” he told Crunchbase News. “Sigstr fills that hole and does in a very special way by unlocking the value of the email channel to drive revenue for B2B marketers.”

Naturally, Wade is also bullish on the Indianapolis startup scene.

“There is a renaissance happening here,” he said. “A couple of years ago, there were a dozen startups, and now there’s 70 or 80 in town. The city is becoming a hub for B2B technology and software as the access to capital has improved and a number of large software acquisitions in the city have created a pool of talented executives who have started companies.”