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Scenes from the New Buffalo: 43North

by / Nov. 4, 2015 8am EST

Beneath a massive video screen a leather-jacket-clad entrepreneur stood and sold his vision of a world in which global crop yields are drastically increased, slowly walking backward and forward, making punctuating gestures while a panel of tech investors and a crowd of a few hundred watched.

After his presentation was finished Brennan Duty and his partner at the start-up company Uma Bioseed, Stephane Corgiere, were grilled by the panel of judges, all of whom have been part of successful investments in New York City and Silicon Valley.

The event, which culminated with 11 teams receiving prizes ranging from $250,000 to $1 million in start-up capital, felt like it could have been taking place in Palo Alto, California. But this was the final day of 43North, New York’s state-sponsored business competition designed to jumpstart a growing entrepreneurial community in Buffalo, taking place in a historic theater on a windy, rainy, 45-degree day.

Backstage the competition’s executive director, John Gavigan, said that the entrepreneurial community here has been growing for some time, but has not been nurtured or cultivated by the business and political class of Western New York. Gavigan said the efforts of his agency and backing of Governor Andrew Cuomo’s administration are starting to make an impact.

While comparisons to Silicon Valley may be farfetched, Gavigan says he is excited to be creating any buzz in the start-up universe. 

“Is there a feel of it?” Gavigan said. “Absolutely, and that’s what makes it so energizing. We haven’t seen that here in a long, long time. We were the Silicon Valley at the turn of the 20th century. It’s nice to get a piece of it back.”

The competition is in its second year. The state is making sizable investments into new technologies in order to change New York’s image, particularly upstate. In addition to the 43North competition, which is funded by Buffalo Billion money and the New York Power Authority, Cuomo has put significant funds into a variety of emerging industries—solar power, photonics, biomedical research, nanoscience—across the state. He has also invested in educational programs to prepare high school students for careers in the emerging fields and offered businesses opening on or near college campuses the opportunity to operate tax-free for a decade through the Start-Up NY program.

For its investment in each company the state takes a five percent ownership claim and the company is required to headquarter their operations in Buffalo. The company also receives free office space in a downtown incubator where last year’s winners are already working. In addition, winners get the full support of the 43North executive staff.

The state’s chances of cashing in on any of this investment through their ownership stakes are slim. Only one in 10 companies will ever achieve long-term success.

Some of the Cuomo administration’s investments and programs have drawn scrutiny. SolarCity, the company set to start operating out of a state-owned, $900 million factory in South Buffalo next year, has caught the attention of the New York Times and Investigative Post, with both news outlets writing about the risky nature of the company and the solar industry.

The company’s stock price tumbled, falling more than 20 percent this week after its quarterly financial report showed a loss that was 10 percent higher than expected and company executives said they were looking to slow growth and focus on profitability. 

Start-Up NY, the program that offers businesses that locate on or near college campuses and work with the schools to develop their products, has also drawn criticism, after it was reported that it only created 76 jobs in its first year of existence. 

Fred Floss, a professor of eEconomics at Buffalo State College and the former executive director of Albany’s Fiscal Policy Institute, said that while some of Cuomo’s investments are risky, it is necessary to take a different approach. 

“If you’re going to jump-start a region, you’re going to have to take some risks,” Floss said.

Floss pointed to the nanoscience hub in Albany as an example of delayed success. It started with a great deal of risk when the groundwork was first being laid nearly 20 years ago and has grown into a model of smart development over the last few decades.

In some ways, Cuomo’s efforts mimic the techniques used by venture capitalists, like those judging the 43North competition, Floss said. By investing in a number of different technologies, the state has positioned itself to have the wins outgain the losses.

“They’re trying to pick a number of high-tech programs with the idea that some of these are inevitably going to fail or not come to fruition,” Floss said. “The trick is to do enough of them so that some of them succeed and you can keep on going.”

Back at Shea’s Performing Arts Center, the 90-year-old theatre with ornate, wood-carved ceilings where the 43North event was held, the 11 teams of mostly 20- and 30-somethings gathered on the stage to learn the amount of their prize money, the culmination of a week of tours, workshops, and preparation.

The awards event featured light displays, highly produced videos, and a series of speeches from state officials, including NYPA board chair John Koelmel and Lieutenant Governor Kathy Hochul, each praising Cuomo for his vision in setting up the competition and pushing the narrative of a Buffalo renaissance.

ACV, a Buffalo company that has developed an application to automate used car auctions, took the $1 million grand prize.

Afterward the stage became the site of a cocktail and hors d’oeuvres hour. Ace Callwood, a member of the team finishing second and winning $500,000 for their painless 1099 software, a program that simplifies the tax process for independent contractors, said he and his partners decided to enter after one of them saw a Facebook campaign promoting this year’s round of funding.

Callwood and his partners will be moving to Buffalo soon from Richmond, Virginia. He had never thought of Buffalo as a destination for tech companies before hearing about 43North.

“I knew nothing about Buffalo,” Callwood said. “Absolutely nothing. This is my first time here.”


Justin Sondel is a staff reporter for City & State, a statewide politics and policy journal in partnership with The Public.

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