- Kim Hart
- Oct 13
Indianapolis bucks the trend to become a hotbed for startups
Photo Illustration: Rebecca Zisser / Axios; Photo: Visions of America / Getty
INDIANAPOLIS — Four years ago, Salesforce bought the email marketing company ExactTarget for $2.5 billion — an enormous payout for the Indianapolis-based firm. Instead of moving it to its own headquarters in San Francisco, Salesforce committed to growing the business in Indianapolis. Since then, it has doubled its employee base, it has its name on the city's tallest tower, and its alums have invested in a new wave of startups.
Why it matters: While startup activity in the Midwest tends to be much lower than the rest of the country, Indianapolis is a star performer, ranking alongside Minneapolis and just below Chicago. The question is how to replicate that success in other struggling, manufacturing-dependent places.
Where it stands: Indianapolis is a thriving business center where the startup rate far outpaces the rest of the state — 7.3% vs. 6.2% statewide. That high rate likely helps explain its resilience and growth during what has been a rough recovery for much of the region, according to an analysis of Census Bureau and Bureau of Labor Statistics data by the Economic Innovation Group.
The formation of new startups is a key ingredient to a diversified local economy that is more likely to benefit from the modern economy. AOL co-founder Steve Case is highlighting the successful ecosystems in areas that are largely overlooked when it comes to investment and attention on his "Rise of the Rest" tour of Midwestern cities this week.
The big break: Indianapolis has had a more diversified business community for several decades, with the headquarters of Eli Lilly, Anthem and Angie's List here. But Salesforce's acquisition of ExactTarget was a turning point for the city — because the wealth generated by the sale stayed in town instead of flowing back to a coastal hub. And Salesforce just kicked off a campaign to get more workers to move to Indianapolis.
- Scott Dorsey, who was ExactTarget's founder and CEO, launched an incubator called High Alpha across the street. He and his partners create and invest in other fledgling companies.
- Chris Baggott, another former ExactTarget exec, recently started a company called ClusterTruck to disrupt the third-party food delivery services like GrubHub and UberEats.
- Companies have clustered around downtown's Monument Circle, creating the density of people that is key to most successful tech hubs.
For contrast: Despite the bright spot for startups in Indianapolis, 79% of the state's jobs are in established incumbent companies that are at least 16 years old — the third-highest share in the country.
"We've been able to recruit more and more people from places like Oracle and Microsoft," Stutz said. "Once they get here, they love it. But when you first tell them they have to move to Indianapolis for a job, they have a blank stare in their eyes."