What's the state of venture capital funding in Fort Wayne, and how can it be more inclusive?

What comes to mind when you hear the phrase “venture capital”? For many, it conjures up images of wealthy people on the West Coast who have the means to invest thousands of dollars in what they think is going to be the “next big thing.” 

While that is true on some level, there’s more to the story than meets the eye. Across the U.S., annual Venture Capital (or VC) funding has increased from 2013 to 2021 by more than four times, going from $22 billion to $96 billion. But there’s still a lack of Venture Capital funding available in Northeast Indiana.

Leslee Hill, Program Director at WEOC Women's Business Center shows an example of a donor check for local women business at the Northeast Indiana Innovation Center“We've had a lot of conversations about how to increase entrepreneurial activity within the community,” says Greater Fort Wayne Inc.’s President/CEO John Urbahns. “A key barrier for that has always been funding for startups for companies to try and scale up and grow. Venture capital funding was an area that we really identified going through our process. We need to make sure that we create funding mechanisms in our community to help companies grow and scale up.”

Urbahns and GFW Inc. have seen that inaction on venture capital can come with a steep cost in that entrepreneurs, or aspiring ones, might relocate where these resources are available. For instance, Green Bay, Wisc., has a $25-million venture capital fund, Grand Rapids, Mich. has a $25-million venture capital fund, and Kalamazoo, Mich. has started a $50-million venture capital fund, all with the purpose of helping entrepreneurs scale.

Nick Arnett, Principal of 1517 Fund, works at Start Fort Wayne - a co-working space at 111 W Berry St #211, Fort Wayne, IN.“My contention is that if they’re not going to find the funding here, they're going to go somewhere else to do it, whether it be Kalamazoo, Grand Rapids, Fishers, Indianapolis, etc,” Urbahns says. “And if they take off and start to grow, are they coming back? Or do they stay where the funding is?” 

That’s why, as part of its Allen County Together (ACT) plan, GFW Inc. is setting a community goal to launch a $10 million venture fund and accelerator by 2026. It will be housed at Electric Works and enhance Allen County's ecosystem for entrepreneurs. The intent is to grow the fund to $25 million by 2031. 

Ben Schwartz, Account Executive, speaks to other team members during a meeting at 3BG SUPPLY CO.Even so, expanding venture capital funding alone won't solve all challenges, particularly those pertaining to equity in entrepreneurship. Nationwide, fewer than 10 percent of venture capital dollars go to women founders, and fewer than 1 percent go to Black founders. That's why, in addition to a venture capital fund, the ACT plan also calls for expanding what’s known as Community Development Financial Institution (CDFI) funds. CDFI funds offer an alternative to traditional lending and play an essential role in generating economic growth and opportunity in some of the nation's most underserved communities. The ACT plan calls for deploying $10 million in CDFI funding by 2026, and $25 million in funding by 2031 to help close disparity gaps. (Learn more about CDFI funding here.)

So who’s already working in the venture capital space in Northeast Indiana, and how is venture capital itself becoming more inclusive? We ask a few local leaders to find out.


As Principal with the national venture capital firm 1517 Fund, Nick Arnett of Fort Wayne has seen that venture capital can be more nuanced than the stereotypes might suggest.

Nick Arnett, Principal of 1517 FundFor instance, one misnomer Arnett encounters is that founders must give up their agency or stake in the company when they accept venture capital funding. 

“It’s not like a bank loan, where there's an exchange of ownership or, or equity in the company,” Arnett says. “A venture firm is only taking a three to 10 percent stake in the company, a minority stake. We're not owning over 50 percent of the company and then telling the founders how to run their business. That gets into traditional private equity and that’s not the business venture is in.”

Nick Arnett, Principal of 1517 Fund, works at Start Fort Wayne - a co-working space at 111 W Berry St #211, Fort Wayne, IN.The 1517 Fund currently manages three funds and has invested in more than 90 companies since its inception in 2010, Arnett says. Its niche is backing, or investing in, college dropouts, students, and deep-tech scientists without degrees or at the earliest stages of their careers. This move is strategic because, historically, venture capital tends to favor people who meet a narrow definition of success often tied to higher education and the ivy leagues. According to global investment business techstars, “more than 70 percent of startups that raise venture capital have a white male cofounder who went to Stanford University and/or Harvard University.”

Thus, in helping those who the 1517 Fund perceives to be “underdogs” in the system, Arnett says the fund is helping to close a gap in the venture capital market and acting as a guide for less experienced founders along the way.

“We've seen a lot, and we've learned a lot by working with those founders and seeing the different pitfalls the companies and startups face,” he says. “We like to tell our founders: ‘You're the captain of the ship. Think of us as the navigator. We (alert them that) there might be an iceberg ahead.’”

Nick Arnett, Principal of 1517 Fund, works at Start Fort Wayne - a co-working space at 111 W Berry St #211, Fort Wayne, IN.In addition to helping founders troubleshoot challenges and maintain their autonomy, Arnett says it’s important for his team to recognize that every startup journey is different; thus, context matters. Often, the support they provide founders is rooted in their specific situation and functions more like counseling or coaching. For instance, they will connect with founders in their portfolio to help troubleshoot and get to know one another.

“What worked for one founder or one company may not work for the next and vice versa,” Arnett says. “So we're really there to support our founders and help them on their journey; not to tell them what to do.” 

Nick Arnett, Principal of 1517 Fund, works at Start Fort Wayne - a co-working space at 111 W Berry St #211, Fort Wayne, IN.At the same time, Arnett acknowledges that the 1517 Fund has to balance each founder’s needs with the expectations of its investors. Sometimes, that means rejecting founders and their business concepts or models. His team looks for businesses that have the potential to scale up very quickly. For instance, he says restaurants or coffee shops might not be the best fit because their growth cycles tend to be slower. In contrast, investing in tech startups can be a more compelling value proposition because the speed and rate of return on investment are often more attractive. 


One local example of this principle in action is 3BG Supply Company, a tech-enabled distribution company focused on operational excellence and digitizing to create a seamless and customer-focused experience.

Portrait of Shane Araujo, President/Co-Founder of 3BG SUPPLY CO.
A few years ago, the company’s Co-Founder and President Shane Araujo found himself in a place he refers to as an “inflection point”—when it makes sense to seek outside funding to scale the business. Araujo says Indianapolis-based Elevate Ventures helped 3BG raise about $5.1 million in funding, with the first round starting in 2017 and the most recent round finishing in December 2020.

Team members from left: Jason Mullins, Sarah Winling, and Jeremy Winters work together.This investment, which allowed his team to hire and expand in size, has translated into substantial growth. 

“In (2019), we grew about 70 percent,” he says. “In 2020, we grew 40 percent. And then in 2021, we grew another 70 percent.”

Thanks in part to his capacity to hire additional team members, Araujo says 3BG is on track to experience another 70-80 percent growth this year. In retrospect, he says the funding also helped his company become more resilient and efficient with its sales team.

Portrait of Shane Araujo, President/Co-Founder, right, and Alex Smith, CEO/Co-Founder of 3BG SUPPLY CO.
“Venture capital allowed for us to learn fast and fail fast—and figure out what works and what doesn't,” he says.

These lessons are something Araujo has integrated into the company’s DNA. His advice to other companies that aspire to be attractive to venture capitalists is to create a climate of psychological safety. When team members feel free to collaborate and feel safe taking risks, this ultimately results in innovation, according to the Center for Creative Leadership.

Shane Araujo, President/Co-Founder of 3BG SUPPLY CO. talks with team members during a meeting.“Make sure the company culture allows for people to be okay with failing and making decisions and doing things that can be a little scary,” he says. “Sometimes you fail, but at least you learn from them. And you're going to grow quite a bit faster than if you were scared and timid to make decisions.”


As Urbahns and Arnett mentioned, there's a need not only to expand venture capital funding locally, but also to make it more inclusive. In recent years, groups like Elevate Ventures, have been working on these very tasks.

Andie Hines-Lagemann, Regional Director of Entrepreneurship for Elevate Northeast Indiana, says the group has invested $15 million in the region throughout the past two-and-a-half years. It has also launched a new fund called Elevate Me specifically for underserved populations that are frequently overlooked for VC funding, including women and People of Color.

As Director of the Women's Entrepreneurial Opportunity Center at the Northeast Indiana Innovation Center, Leslee Hill is also working to address this disparity. Hill and her team have launched a program called The Glass Floor Network to educate female and nonbinary business owners and their potential supporters on angel investing. Angel investors are individuals with means who invest their own money into startup ventures, whereas venture capital investors are employed by an organization, where they invest other people's money.

Portrait of Leslee Hill, Program Director at WEOC Women's Business Center at the Northeast Indiana Innovation Center.She hopes to engage specifically women and nonbinary community members who have the funds to invest and become venture capitalists or angels themselves. 

“Nobody talks to us (women) about angel investing, or what it means to think about investing outside of college, our children, or retirement,” Hill says.

Leslee Hill, right, Program Director talks with Rosalina Perez, Program Manager during a meeting together at WEOC Women's Business Center at the Northeast Indiana Innovation Center.In 2021, only 33.6 percent of angel investors were women, nationally. Hill points out that The American Angel, the first in-depth study to comprehensively identify angel investors, sheds some light on gender disparity. More than half—51 percent—of women feel the founders' gender to be highly important, compared to 6 percent of male investors. Thus, having more women investing in businesses may help close the gender gap and ensure greater equality in the system.

As Hill puts it, “More underserved individuals will get funded if we teach and encourage women to become angel investors.” 

Leslee Hill, left, Program Director and Rosalina Perez, Program Manager at WEOC Women's Business Center show off business books at the Northeast Indiana Innovation Center.Historically, Hill sees two of the biggest reasons women haven’t become VCs or angels in the past is because qualifying as “accredited” is tricky since women get paid less than men and are less likely to climb the ladder to C-suite than men. There’s also the fact that though women live longer than men and therefore inherit wealth, financial advice for women is to save or be fearful of the future. 

“Our country sees investing to be a ‘good risk’ for men, but a ‘bad risk’ for women,” she says.

The idea behind the Glass Floor Network, which launched this summer, is that women come prepared to write a $100 check to another female-owned company and leave with valuable knowledge. In Hill’s estimation, the program is a win-win, as women leave knowing how to become angel investors and are informed about whether a business idea is viable. On the flip side, the founders who pitch to receive funding leave with financial and social capital they can then use to grow or scale their enterprise, and maybe become angels or VCs themselves someday.

Leslee Hill, Program Director at WEOC Women's Business Center shows an example of a donor check for local women business at the Northeast Indiana Innovation Center.So what’s next for the Glass Floor Network?

Hill says he hopes that more women will consider becoming angel investors, given the barrier to entry is low. Any woman or nonbinary business owner can invest, provided they have the means to pay $100 in support of a local women-owned venture’s growth. And those interested in pitching may contact Hill to learn more about the opportunity. 

“I would see it as a success if we could get 100 women to join the Network, and learn how to be an angel investor each quarter,” she says. “(That would mean) at least 100 women who are writing $100 checks to one of the small businesses.”

This article was made possible by underwriting support from Greater Fort Wayne Inc.
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Read more articles by Lauren Caggiano.

Lauren Caggiano is a freelance contributor for Input Fort Wayne. A graduate of the University of Dayton, she returned to Northeast Indiana to pursue a career. She currently writes for several local, regional, and national publications.