Indiana startup funding fell in Q2 2026

Indiana closed the second quarter of 2026 at the back of the Midwest pack: $35.65 million across 13 deals, the smallest state total of the six we track. Read in isolation, it looks like a slump, and the year-over-year comparison backs it up - Indiana's funding is down about 77% from the $152.7 million it raised in Q2 2025.

But the deal count tells a different story than the dollar figure, and the distance between the two is where things get interesting.

Beginning with the dollars, U.S. startups raised $155.67 billion in Q2, up 212% year over year, as the average deal climbed to $83.4 million and capital piled into a short list of coastal mega-rounds. California alone took $122.8 billion, close to 79% of the entire national total, in a single quarter with Anthropic was approximately 50% of that figure. Against that surge, every Midwest state's funding fell year over year, so the problem is a regional one. Ohio dropped hardest, down roughly 85%; Indiana's 77% sits in the steeper half of the group.

In terms of deals, Indiana logged 13 rounds in Q2 - essentially flat against the 14 it recorded a year earlier, and nearly double the seven it managed in a quiet Q1 2026. Deal flow therefore, is not necessarily the problem. The Hoosier State turned in more rounds than Wisconsin (12) and landed within one of Michigan (14).

What thinned out yet again across the region was the size of the checks. Indiana's average round came to $2.74 million — the smallest in the region, and down from $10.9 million a year ago. That is roughly 3% of the national average deal, and is also the single figure that explains most of the distance between Indiana and its neighbors.

The Michigan comparison is worth considering. Michigan booked almost exactly the same number of deals — 14 — yet came away with $764.5 million, due to one outsized round which pulled its average up to $54.6 million. Indiana saw nothing on that scale, and 13 small-to-mid rounds add up to a small-to-mid total; no round arrived large enough to reset the number the way Michigan's did. For the math-minded, at $2.74 million a deal it would take Indiana something like 280 rounds to reach what Michigan reached in 14.

So this quarter isn't about Indiana founders failing to raise; it's about the ceiling on how much they raised. In a national moment defined by capital concentrating into fewer, larger deals, carrying the region's smallest average check is a particular kind of bind: plenty of companies clearing early rounds, very few graduating to the tier that shows up on a chart.

The rest of the Midwest fills in around that. Illinois led on volume with 41 deals for $226.3 million; Minnesota ($103.8 million, 18 deals) and Wisconsin ($87 million, 12 deals) held the middle; Ohio ($51.4 million, 16 deals) and Indiana rounded out the rest. Indiana and Ohio — the cohort's two smallest totals — also carried its two smallest average deals, $2.74 million and $3.21 million. Whatever is throttling Indiana this quarter isn't unique to it, but it felt it most.

The forward question is, does the state need more startups raising money? Or does it need a handful of them to raise larger checks like in other states?

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