There’s good news and there’s bad news when it comes to Buffalo startup funding in the first half of 2024.
On the bright side, six startups have raised roughly $30 million, an increase over the seven companies that raised $19.41 million the first half of 2023, and more businesses have continued to raise through the month of July. That’s especially impressive given the overall tough economic climate that has continued from last year through 2024 so far.
“The fact that you see companies raising still means we have a strong number of people creating innovative companies in Buffalo, and you’re still seeing people like us … making investments,” said Richard Kim, University at Buffalo Startup Ventures director.
The university has UB Cultivator, an early stage startup program that can lead to pre-seed funding for participating companies.
But the $30 million raised within the first six months of this year is predominantly thanks to CleanFiber’s $28 million round. And 2024’s numbers so far remain well below 2022 levels, when 19 startups raised about $140 million within the first half of that year.
Why it matters: Monitoring startup funding helps gauge the health and growth of the Buffalo-area technology and startup community, a burgeoning part of the local economy. This sector, like many others, has been affected by underlying economic factors.
While venture capital raised in the U.S. is pacing above projected levels, 2024’s totals are still predicted to be a little below $80 billion by year-end. That’s lower than 2023’s $89.9 billion, according to Pitchbook’s 2024 US Venture Capital Outlook: Midyear Update.
“Although economic uncertainty has subsided since 2023, LPs are still contending with a prolonged high-interest-rate environment and persisting skepticism regarding startup valuations,” the report reads. “As a result, they are scrutinizing opportunities more closely due to limited distributions.”
The venture capital sector tends to act almost like a microcosm of the general economy, Kim said. In other words, when people feel less confident about the overall economy, typically you’ll see less venture capital activity.
That being said, he expects venture capital activity to continue to get squeezed, though there are some fast-adoption technologies like AI that are garnering attention, both with the amount being raised in that space and the number of startups being developed.
For those seeking capital, Kim said entrepreneurs should focus on building strong companies, making revenue from their best fit customers right away and then figuring out if the businesses fits the venture capital model.
For later-stage startups, venture capitalists are looking to invest in companies to exponentially move along an already growing business.
“If you’re on that track, you’re probably a really good candidate. But if you’re not… it’s a harder story to tell the VC,” Kim said. “Building a solid company should always come first.”
These Buffalo-area startups have raised funding in the first half of 2024:
- CleanFiber ($28,000,000)
- SelectFI ($750,000)
- Top Seedz ($750,000)
- TeleSafety ($230,000)
- Edenesque ($175,000)
- Circular.eco ($100,000)
Did we miss a funding announcement? If so, email lbunny@bizjournals.com to be included on the list.
Check out previous annual recaps from 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015 and 2014.
