Indianapolis, a city known for both amateur and professional sports teams and a love of motor racing, has in recent years become a hotbed for sports technology startups, with investors pouring millions into sports-related ventures based in the metro area since 2015. Many of those companies are drawn to Indy’s status as a hub for professional and collegiate sports, as well as programs designed to nurture the growing sector.
“Indianapolis has an incredible sports DNA and emerging tech hub,” said Jordan Fliegel, managing director of Techstars Sports Accelerator, Powered by Indy, an Indianapolis-based accelerator program for sports tech startups that was established in 2019. “We are proving we could combine a passion for sports with a growing technology ecosystem.”
Over the past five years, investors have pumped $2.2 billion into Indiana-based startups and approximately $1.3 billion into startups based in Indianapolis specifically, according to Crunchbase data.
Our database also shows just two sports tech startups, currently headquartered in Indianapolis, that disclosed funding within the past five years: Upper Hand, a provider of sports and fitness management software and tools that has raised $4.4 million since its inception in 2012. Stick & Hand, a media and content platform for golfers, raised $250,000.
When Scott Dorsey, managing partner of venture studio High Alpha, moved to Indianapolis in 2000 to start his company, ExactTarget, the venture capital scene in Indianapolis was still fairly undeveloped. But Dorsey’s company ended up going public in 2012 and was sold to Salesforce in 2013—a still relatively rare example of a successful tech exit in Indiana, Dorsey said.
Dorsey is also past chairman of Indiana Sports Corp, a nonprofit civic organization that aims to foster economic development for the community via sporting events.
“Since forming the sports commission 40 years ago, it has become a powerhouse for attracting sports organizations and big-league sporting events,” he said. “An ecosystem of sports tech companies grew up around NCAA and Motorsport, but with Techstars, will attract entrepreneurs from all over the world that will come and fall in love with Indianapolis.”
Another, lesser-known advantage for Indy’s burgeoning startup scene is the concentration of talent coming out of the nearby universities, including Indiana University, Purdue, Notre Dame, Butler and Ball State, graduates of which are seeing enough activity to stay in Indianapolis, Dorsey said.
He envisions more innovative growth happening in sports and technology, especially as the NCAA begins allowing college athletes to monetize their likenesses. He expects to see technology built in advance of that trend.
If you build it, they will come
Indiana is home to not only professional sports teams including the Indianapolis Colts, Indiana Pacers and the Indianapolis 500, it is also the headquarters for several prominent sports organizations, including the National Collegiate Athletic Association and USA Track & Field.
That rich sports history was one of the drivers for Techstars, the accelerator program, to establish itself in the city, Fliegel said.
Techstars launched its first cohort in 2019 with 10 companies. Last month, it finished up its second class with 10 new companies, seven of which were able to be onsite, representing e-sports, fan engagement, fitness and nutrition, AI and robotics, sports media, and athleisure.
In addition to getting to know the executives within the program partners, including the Pacers, NCAA, Next Level Fund/50 South Capital and Indiana Sports Corp, the startups have the opportunity to learn more about doing business in Indiana, Fliegel said.
Of the seven startups able to attend the second class, nearly all of them have already hired local people, are in the process of opening a second office in Indianapolis, or are looking to fully relocate to Indy.
- Beastcoast, a professional e-sports team and digital media company founded by Brian Anderson, an Indiana native. One of his gaming teams is in Indianapolis currently training for it next tournament. The company also plans to have retail space locally to both sell merchandise and use as a content production facility. Beastcoast raised $2 million in pre-seed funding and plans to go after a $4 million or $5 million seed round in the first quarter of 2021, Anderson said.
- Rebus Technology, a Colombian-based fan engagement company, recently moved most of its employees to Indianapolis, CEO Juliana Villalba said. In addition to its Latin American clients, Rebus has secured six in the U.S. and works with them to monetize and engage fans with offerings like player experiences, auctions, sweepstakes and even bedtime story reading by a team mascot, she said. Last year, Rebus raised $600,000 in pre-seed investments and has begun raising a $2 million seed round.
- Tennibot’s founder Haitham Eletrabi moved to Indianapolis for the second part of the Techstars program. The company builds autonomous robots that pick up tennis balls. Eletrabi intends to house some of Tennibot’s manufacturing in the city, as well as potentially open an office there, he said. The company has raised some money already and is in conversations with investors for its pre-seed round.
Attracting startups, investors
While a majority of startups in California, New York and Massachusetts dominate VC tech investment in the United States, other cities and areas are seeing increasing growth, including Indianapolis, said new DRIVE by DraftKings CEO and Managing Partner Meredith McPherron via email. DRIVE is a Boston-based multistage venture capital firm that invests in sports tech and entertainment.
“The city offers startups the potential support from multiple pro sports teams and organizations, as well as the resources from a number of high-quality colleges and universities,” McPherron added. “Take into account Indianapolis’ rich sports history and tradition coupled with its proximity to major cities around the country, startups are presented with a great opportunity for growth and success.”
The state of Indiana and venture capital firms provide good incentives to attract other sports tech startups to Indianapolis, although it was difficult to get investors to see the promise of sports tech at first, Upper Hand founder and CEO Kevin MacCauley told Crunchbase News.
What drove a perception change was when San Luis Obispo, California-based Mindbody, a fitness studio software management company, went public in 2015.
“From that point on, we could see an acceleration in sports and fitness investing,” MacCauley said.
MacCauley is from Evansville, Indiana, and went to Indiana University. Prior to Upper Hand, he lived in Washington, D.C., working with his brother at ClassWatch, a company that provided graduating seniors an alternative to a class ring.
He started Upper Hand after coaching baseball and recognizing the lapse in how people ran their coaching businesses, including how they get paid and scheduled their time.
“That was the spark,” MacCauley said. “We pivoted to building software and moved to Indianapolis to bring the company back to my home state.”
Meanwhile, Techstars, along with the city and state, has done a better job of raising awareness about opportunities in the sports tech industry, MacCauley said.
“Despite being impacted by COVID, this year’s cohort of companies was good,” he added. “In addition, legalized gambling in Indiana started to show companies how this industry is coming to the forefront whether you are involved in gambling, software or fan engagement. The industry is changing before our eyes.”