Kristian Andersen is one of the founders of High Alpha.
The founding partners at venture capital firm High Alpha love Indianapolis, but partner Kristian Andersen takes the cake: he named his 12-year-old son Indy after the city where he went to college in the ‘90s. All transplants to the Midwestern town, Andersen and his three partners devised their early-stage firm during a brainstorm at a weekend getaway in a cabin in south Indiana in 2015. Six years later, it’s invested in more than 50 companies — and just raised the largest VC fund in the state’s history.
High Alpha closed on $110 million for its third fund in February, grabbing capital from institutional investors like Greenspring Associates and the Foundry Group. This marks steady progress from the $85 million it raised in 2018, the largest fund in the state at that time, and brings the firm’s total capital to $250 million. Early word of the record raise was first reported in the Midas Touch newsletter on Sunday.
Indiana may not seem like the ideal place to launch a tech company. But High Alpha managing partner Scott Dorsey, who cofounded the firm with Andersen, Eric Tobias and Mike Fitzgerald, has firsthand experience scaling a startup to unicorn status in its capital city. Dorsey was formerly the CEO and founder of ExactTarget, a cloud marketing software company launched locally in 2000 and sold for $2.5 billion to Salesforce in 2013. Tobias and Fitzgerald also worked on the product at Salesforce; the group incubated and spun out another startup led by a former ExactTarget executive, MetaCX, from High Alpha in 2018. “We’ve proven you can break out a venture-scalable business in a place like Indy,” says Andersen, who hails from a design consulting and seed investing background. “If [ExactTarget] was transformative for the city, what would happen if we did that a lot more?”
The firm has already seen this potential play out in its own portfolio. High Alpha has had five exits so far, including marketing software company Sigstr, which sold to Terminus in 2019, and sales platform Octiv, which was acquired by Conga in 2018. Both were founded in Indianapolis.
With its new fund, High Alpha plans to continue to focus on business software-as-a-service companies at or around the Series A stage, Andersen says. Areas of particular interest to the firm: the future of work, and Covid-19 inspired problem solvers like Mandolin, which looks to connect artists and venues with their fans as concerts remain cancelled.
Median fund sizes across the US have steadily grown and regions like the Midwest have seen a spike.
High Alpha’s growing fund sizes also demonstrates the evolution of fundraising in the U.S. outside of the main hubs of Silicon Valley, Boston and New York. The Midwest has seen a surge of venture activity over the last few years, with the region’s median fund size climbing 80% in five years, from $8 million in 2015 to $41 million in 2020. (High Alpha’s new fund, which exceeds the typical, also invests outside the region, its partners say.)
With the new fund, High Alpha also plans to deepen development of its venture studio, through which the firm’s partners pour much of their management fees to get companies off the ground. High Alpha has launched 28 companies so far through the program, including MetaCX; those startups have gone on to raise more than $160 million in follow-on capital so far.
And as the national vaccine rollout makes returning to offices more of a realistic proposition in the weeks to come, the firm plans to move into new headquarters this year in Indianapolis, what Andersen hopes will serve as an anchor for a growing entrepreneurship hub. “There are very few cities that are operating at the intersection of opportunity and access to opportunity the way Indy is,” he says.
I’m a reporter covering venture capital, startups and investors out of New York. I was previously a reporter at the Venture Capital Journal and Private Debt Investor. I