Tapping into growing interest in start-ups based in the Midwest, Heartland Ventures has closed its second fund at $52 million, more than triple the size of its debut fund.
The Midwest has seen a surge of venture investment in the past few years, according to data from PitchBook. Investment in the region totaled less than $800 million per year since 2013 and before 2018. VC dollars for Midwest-headquartered companies topped $1 billion for the first time in 2018 ($1.2 billion) and held steady in 2019 ($1.04 billion) and 2020 ($1.13 billion) before more than doubling to $2.41 billion in 2021. VC interest has remained strong, with $1.85 billion invested in the region as of November 15, PitchBook reports.
Heartland’s Fund II will invest in high-growth technology start-ups with B2B strategies serving real estate, construction, manufacturing and logistics. The fund’s limited partners include unnamed “large corporations in the Midwest.”
The firm, based in Columbus, Ohio, held a first close on $28.15 million out of a targeted $50 million from 56 investors as of January 15, 2021, according to an SEC filing. It filed an amended Reg D on January 3 of this year showing it had raised $48.97 million out of a targeted $60 million from 56 investors.
Heartland raised $15 million for its first fund in 2018. That vehicle had an initial target of $25 million, according to a regulatory filing.
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“We are thrilled to be announcing the successful closing of Fund II, which is more than triple the size of Heartland’s debut fund. In just a few years, our unique model has proven valuable to both high-growth startups and industrial corporations,” Max Brickman, founder and managing director of Heartland Ventures, said in a statement. “For too long, there has been a disconnect between the innovation happening in traditional tech hubs and the legacy industrial corporations that stand to benefit from it. The opportunity to connect industry with innovation is more compelling than ever.”
Heartland makes investments of between $500,000 and $2 million. The firm focuses on early-stage companies, typically in seed and Series A rounds.
Fund II is expected to make 20 investments over four years at the seed and Series A stages. Several investments have been made, including in the autonomous forklift company Third Wave Automation, parking platform Parkade and construction-specific business development platform ProjectMark.