If you read Victor W. Hang’s book, “The Rainforest: The Secrets to Building the Next Silicon Valley,” you know that the ultimate entrepreneurial ecosystem is described as a system in which every ecological niche or space is occupied by an entrepreneurial entity, success is not an end in and of itself, failure is celebrated and weeds grow everywhere. And if you compare Buffalo as it was 10 years ago to a rainforest, you could conclude that the city’s climate could have been described as a desert.
About 10 years ago, I was fortunate to be one of the founding members of the Buffalo Angels, a group of investors who joined together in the name of supporting local startups through seed round investment funding. Many of the investments made by the Buffalo Angels were used for startups’ proof of concept since early-stage funding for proof of concept was scarce in Buffalo’s ecosystem at the time.
Ten years ago, Buffalo did not lay out the welcome mat for new startups like it does today. There were no identifiable angel investors, no “open to the public” entrepreneurial accelerator – other than the Baird incubator at SUNY’s University at Buffalo North Campus, which was restricted to technologies created at the university.
Rand Capital Corp. was the only venture fund willing to fund early-stage innovators, which severely limited the number of Series A transactions that occurred locally. “The Valley of Death” is the time between formation and receipt of a startup’s first round of formal investment, such as an angel round or a venture capital round, and a decade ago it was estimated that “The Valley of Death” in Buffalo was between two to four years, quite a long time for an entrepreneur to await a payday.
The formation of the Buffalo Angels seemed to create some buzz around entrepreneurship and community support for our burgeoning number of startups. The availability of potential early-stage funding resulted in more entrepreneurs setting up shop here in Buffalo. The growing entrepreneurial community had an increased number of interested technology and academic founders but very few businesspeople embedded as leaders of the companies. And so, to meet the demand of prospective investors for startups to have quality management teams, Launch NY was formed to accelerate the new startup ventures through “The Valley of Death” time period through the creation of strong management teams and supplying of seed funding for proof of concept.
In 2014, 43North was slated as “The World’s Largest Business Idea Competition,” with an impressive $1 million top prize funded, in part, through Gov. Andrew Cuomo’s Buffalo Billion. The recognition of Buffalo’s startup scene was steadily becoming more frequent and more widespread. Suddenly, new founders (and funders) began to appear. The Buffalo Angels formed its first Angel Capital Fund, with more than 30 angels investing in a pooled funding source for startups. Several local venture capital funds launched. Rand Capital continued to make investments in startups and saw several impressive exits.
Today, 10 years after Buffalo’s startup ecosystem could have been considered an entrepreneurial desert, the city is well on its way to becoming Victor Hang’s rainforest. A key indicator of a successful entrepreneurial system is whether the entrepreneurs who successfully launch one startup become serial entrepreneurs and launch additional startups thereafter.
A couple of recent examples prove this is happening in Buffalo. The 160 employees of ACV Auctions, one of the fastest-growing startups in Buffalo, are now led by George Chamoun, the same entrepreneur behind the success of Synacor.
Eric Reich, one of the founders of Campus Labs, led the company to multiple exits and recently took over as chairman of the 43North board of directors. It’s a role in which he will lend his entrepreneurial success to 43North’s recruitment of entrepreneurs to Buffalo.
Local entrepreneurs are hard at work to bring success to their companies and repeat their efforts, and the support system for startups is growing. Higher-education institutions are offering new courses in entrepreneurship, including a course on legal issues concerning entrepreneurial startups taught at UB by Colligan Law partner Matthew Pelkey. New co-work spaces, incubators and accelerators are being developed throughout the city and region. And among the city’s many recent accolades, Entrepreneur Magazine recently ranked Buffalo No. 2 on its list of Cities Whose Entrepreneurship Communities are Booming.
The future is bright for the Buffalo startup ecosystem, and in a booming community for entrepreneurship, the boom has just begun.
Original column can be found on the Buffalo Law Journal website:
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