Indiana’s Canary in the Coal Mine Moment

I'm worried we just saw the canary in the coal mine moment for startups in Indiana.

I've spent the last 10+ years building venture-backed startups, backing founders, and running marketing and go-to-market teams here in Indianapolis. I even started my career at ExactTarget (which was acquired by Salesforce in 2013) and got to see first-hand the generational impact a successful startup can make on an entire city and ecosystem. I'm a Hoosier through and through — I grew up in Indiana, and I love building companies, creating jobs, and backing founders and teams in Indiana. And I care a lot about whether Indiana - and the Midwest as a whole - gets to build the next great wave of companies or just watch them be built on the coast.

Indiana, though, just posted its lowest venture funding quarter since 2018. And honestly, it feels like longer than that. Indiana startups raised $33.1 million across 29 deals in Q2 of 2026, according to the Q2 2026 PitchBook-NVCA Venture Monitor. A year ago we raised $166.9 million in Q2 2025 across 25 deals.

Many of the measured takes going around right now are to not overreact to one quarter. And I get it. One quarter is noise. Especially in a market like Indiana where a single fundraise sways the whole quarter's data. But I'm also worried that we are sleepwalking past a warning that's chirping right in front of us, and it's time to do something about it.

Yes, more deals closed (29 versus 25 YoY), but they only raised a fifth of the money. People are still starting things, but the big checks that turn a good idea into a great, high-growth company just aren't showing up.

My fear is that we are being left behind, and we need to wake up. Our startup ecosystem is atrophying. We haven't had a tech IPO in Indiana for nearly 15 years, and it's been almost five years since we had a meaningful liquidity event in the local ecosystem.

And this isn't only an Indiana story. Nationally, venture money is concentrating into fewer, bigger, coastal, AI rounds. The first half of 2026 already booked $412.7 billion, more than all of 2025. Megadeals of $100 million or more made up 87.5% of every dollar deployed. AI took 86% of it.

When 86% of capital chases AI into a couple of coastal hubs, the Midwest isn't having a soft quarter, it risks being structurally locked out.

The Bay Area alone took $98.6 billion in a single quarter. Every city that didn't make PitchBook's named-hub list, combined, took $12.7 billion. No Midwest metro is even on that map. Anthropic raised $65 billion in one round, roughly double what our entire region raises in a good year.

That's the game being played right now, and we're not even on the field.

And, unfortunately, Indiana is being completely left behind in the area that matters the most right now: AI.

The exact number depends on which study you trust, but none of them are flattering. The US Census Bureau's Business Trends and Outlook Survey has about 17% of Indiana businesses using AI, ranking us 28th among states and sitting just below the national average. Broader readiness studies are harsher: the 2025 Brainly AI-readiness index puts Indiana in the bottom third, 13th-least-prepared in the country, when you weigh jobs, education, and funding together.

AI-related job postings in Indiana, though, are up roughly 440% since 2023, even as postings outside the sector shrank. But only 5% of organizations are training on AI at any real scale.

The defining technology of the decade is being funded somewhere else and adopted somewhere else. We can keep telling ourselves we'll catch up. Or we can admit we're not playing hard enough yet and fix it.

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So how do we fix it?

I won't pretend to have the easy answers to any of this, but I think we need a rallying cry in the Indiana startup ecosystem. Here are a handful of areas we need to start to invest in, in order to turn things around:

Start bigger, swing harder. Indiana added around 2,000 new business applications a week this spring, up year over year. I love that. But a business application isn't a venture-scale, big-swing startup. They are not the same thing. We are seeing more and more bootstrapping and seed-strapping as well, which is fantastic. But you just can't build a whole ecosystem on that layer alone. Ambition is a muscle, and we've let it get comfortable. The next Indiana breakout will not come from a safe idea.

Put real growth capital behind it. Not just safe, small, local checks. Capital that underwrites big outcomes and expects them. If our own institutions won't back Indiana's biggest swings, we can't act surprised when the swings (and the founders making them) leave for a coast that will.

Rally around our rights to win. We need to stop trying to be a generalist tech hub. We're built to win in specific places: health and life sciences, martech and AI-native go-to-market, ag, advanced manufacturing. Concentrate talent, capital, and attention there. It's a bet we're making directly at Alloy Partners, having launched One Health Studio last year around exactly this Indiana strength. Play where we're strong, not where everyone else already is.

Buy from our own founders again. Indiana used to be a place where a startup could land its first 10 to 25 friendly logos and get to $500K in ARR on the strength of local relationships. I'm worried that flywheel is fading. Our enterprises and mid-market companies need to start buying from local startups again. A first customer is a form of venture capital, and we have more of it sitting in this state than we act like we do.

Get back in the same room. It's hard to name a place where founders, startup operators, and investors even gather anymore in Indiana. Post-COVID, remote-first, half-empty offices, we quietly lost the ecosystem and community that was built over the last 25 years. Proximity built this ecosystem, and its absence is showing up in our morale, our ambition, and yes, the funding data. It's why I'm so excited about building community at places like Polk Stables. Come build in the same room as other builders. It matters more than we admit.

At the end of the day, we can call this a soft quarter, keep our head down, and move on. Or we can treat it as the wake-up it is and kick it into high gear.

I know which Indiana I want to build in. Let's go build it.

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Drew Beechler is VP of Marketing at Alloy Partners, a venture builder that co-creates startups and venture studios with corporations and universities. He was an early leader at High Alpha and the founder and CEO of Holder, a CRM and marketing automation platform for web3 brands.