- Scott Dorsey is hoping to help build Indianapolis into a tech hub.
- Dorsey was the cofounder of Indianapolis-based ExactTarget, which Salesforce bought in 2013 for $2.5 billion.
- He now runs a venture firm and startup studio in the city called High Alpha that’s helping to build and fund the next-generation of Indianapolis-based tech companies.
- The city has many features that make it an attractive place for tech, particularly enterprise software firms, including a wealth of talent and proximity to plenty of Fortune 500 companies looking for technological solutions to their business problems, he said.
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If you were asked to name the top tech hubs in the US, you’d probably list San Francisco or Silicon Valley, New York, and maybe Boston, Seattle, or Austin.
Scott Dorsey is hoping that someday soon you’ll include Indianapolis on that list.
Indiana’s state capital has all the right ingredients to become a tech center, according to Dorsey, a managing partner at High Alpha, a venture firm and startup studio based there. Dorsey knows first-hand that the city can foster innovation. He founded and helped build cloud marketing service provider ExactTarget in the city before selling the company to Salesforce in 2013 for $2.5 billion.
“There’s an unusual amount of talent … right here in Indy,” Dorsey told Business Insider in a recent interview. “We have all the conditions in place,” he continued, “to create a lot more ExactTargets.”
Indianapolis has a good collection of high-quality nearby universities churning out business-school graduates and software and other engineers, including Purdue, Indiana University, and Notre Dame, he noted. Plus Softbank has continued to invest in the former ExactTarget operation there; the largest tower in Indiana is now named Salesforce Tower after the company expanded and moved its Indianapolis operations there. So there are plenty of well-trained and experienced tech workers and aspiring tech entrepreneurs in the area, he said.
Additionally, the city is a short nonstop flight away from the tech, financial centers of New York and Boston. And it’s centrally located in relation to the the headquarters of a plethora of Midwest-based Fortune 500 companies, many of which are searching for technological solutions to their business problems, he said. Those are the type of potential customers that Silicon Valley-based enterprise software firms may have a difficult time understanding and connecting with, he said.
“That proximity advantage we have of not being all the way on the West Coast gives us, I think, an edge around customer accessibility,” he said.
Dorsey’s firm is creating new Indianapolis-based startups
Dorsey himself is trying to play a big role in transforming Indianapolis into a tech center. High Alpha, which he cofounded in 2015, both incubates and funds local startups.
The firm has its own team of business design people who are continuously exploring new startup ideas in the enterprise software space. They solicit concepts from corporations, other venture firms, entrepreneurs, and from High Alpha’s own staff. Every quarter or so, the firm holds what it calls a sprint week, in which it takes the four most promising ideas the team has been exploring and attempts to flesh them out. At the end of the week, it holds an internal pitch competition and selects the best one or two concepts to turn into startups.
High Alpha turns the concepts into companies, funds them, helps recruit their leadership teams, and assists them in building out their initial product. The firm has a staff of 35 and for the first six to 12 months after the startups launch, High Alpha’s employees serve as support staff for them, taking care of their payroll and taxes, helping them recruit employees and build their brands.
“We’re very hands-on during that forming stage,” Dorsey said.
Thus far, High Alpha has founded 17 companies through its studio, three of which have been acquired.
Once the companies get off the ground and are ready for seed-stage capital, High Alpha starts to transition from acting as a kind of incubator to taking on more of an advisory role. But it continues to assist the startups, often giving them funding through its separate venture funds and also by helping them attract the outside financing they need to grow and mature.
Indianapolis is still nascent as a tech hub
Unlike New York or Silicon Valley, Indianapolis doesn’t have a deep reservoir of venture capital, so startups there often have to rely on sources outside the state to get funding, he said. Dorsey and his colleagues have built relationships with venture firms on both coasts and have been successful in getting them to back the startups it’s founded.
Emergence Capital, a Silicon Valley venture firm that specializes in funding enterprise software startups, is one of the biggest investors in High Alpha and two of its partners, Santi Subotovsky and Gordon Ritter, sit on High Alpha’s board.
Meanwhile, Silicon Valley-based Menlo Ventures, recently invested in Zylo, a High Alpha startup that helps companies manage their enterprise software subscriptions. And, Sigstr, which also came out of High Alpha’s studio and offers and email marketing service, counts Boston’s Battery Ventures among its investors.
To be sure, Indianapolis still has a long way to go to be considered in the same breath as the established tech hubs. Last year, venture capitalists invested $367.7 million in Indiana-based startups, according to the National Venture Capital Association and Pitchbook. That amount ranked 23rd among all states, trailing far behind the $77.3 billion venture funders put into California-based firms.
Some 88 Indiana companies got venture funding last year, putting the state in 19th place in that category, according to the NVCA and Pitchbook. By contrast 2,869 firms got venture funding in top-ranked California.
Still, Dorsey is bullish on Indianapolis and he’s happy to be using the experience and insights he gained from building ExactTarget to help other budding Indiana entrepreneurs.
“That’s been one most rewarding aspects to what we’ve done at ExactTarget and now at high alpha, is just helping to transform our community — helping to transform the tech community, creating jobs, creating a tech hub,” he said.
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