There’s a new fund and program based at UAlbany meant to help early startups become more attractive to potential investors.
The program by Innovate 518 can provide non-dilutive pre-seed funding up to $50,000. To start, the pilot program has a total of $150,000 to invest.
Innovate 518 is a state-funded program that connects 24 member organizations focused on fostering entrepreneurial efforts.
The Shovel Ready program is being led by Heidi Knoblauch, who started last year as one of the entrepreneurs-in-residence for Innovate 518. Based on what she’s heard from investors, entrepreneurs and others over the last several months, Knoblauch thinks this type of program will be a big help to the local startup ecosystem.
“A number of the angel investors that I regularly speak to in the area keep saying that there's no deal flow, and a number of the entrepreneurs keep saying that there's no access to capital,” Knoblauch said.
The program will basically work to move these startups further along in the development process so that investors feel more confident in investing, she said.
“The problem is that people feel there's no deal flow because companies are too risky right now, so I had to think up a way to de-risk them,” Knoblauch said. “Companies aren't getting their first shot here to do a project that would allow for investment in the way that they would in larger metros, and so we just have to spend a little bit of money from our state-funded programs to allow for this private investment, which I feel confident will follow long after these de-risking projects are done.”
Something else she said holds up deals is disagreement about details like valuation. That can lead investors to spending $25,000 or $50,000 in legal fees although they’re writing checks of only $250,000
Startups that receive the Shovel Ready funding must agree to certain terms, such as valuation, and outline a project that can be completed in up to six months, like creating a prototype. Once the program is completed, startups will be introduced to private investors who will have the option to invest based on the initially agreed upon terms.
As part of the program, startups will complete several training and mentorship requirements, including a regional NSF I-Corps Program at UAlbany.
Applying companies must be legally formed entities and a member of one of several incubator programs: Biomedical Acceleration and Commercialization Center, University at Albany Innovation Center, Tech Valley Center of Gravity in Troy, S.T.E.A.M. Garden in Albany or NY-BEST.
The startups will be selected and monitored by the Innovate 518 advisory committee: Nasir Ali, Alan Evans, John Pietrangelo, Joe Richardson, Matthew Wagoner, Peter Gonczlick and Todd Tidgewell.
