43North has occupied a big place in Buffalo’s civic psychology since it debuted in 2014.
The idea is simple – a business competition that brings startups to Buffalo.
But 43North is a contest on steroids. Funded by New York state, it seeks eight startups a year and gives them prizes ranging from $1 million to $500,000.
That gives it a unique place even amidst the national landscape of accelerators and government-backed programs seeking to attract startups.
The taxpayer-backing, the pageantry surrounding its once-a-year finale event, the boom-or-bust nature of startups: All those factors have made 43North a subject of near-constant conversation in Buffalo’s business circles since it debuted.
After canceling last year’s program because of the pandemic, the competition returns this month, culminating in the Oct. 28 finale at Shea’s Performing Arts Center.
It will be a celebratory moment, especially for the winning companies.
But there are also looming questions:
- Will the state continue to fund the 43North operation and the prizes?
- Will 43North maintain the general structure of its annual competition?
- What kind of impact will the 43North Foundation – created earlier this year – have on Buffalo’s startup economy going forward?
Many of these questions have yet to be fully answered, said William Maggio, a 43North board member who chairs the 43North Foundation board.
But Maggio believes that 43North has proven its success both in the tangible progress of its portfolio companies, and as an organizational backbone that supports and promotes Buffalo’s startup economy.
New York state has committed to funding the competition through 2023. Maggio said he believes that relationship will continue.
“We believe the state is ecstatic about the results of this competition,” he said. “To what degree I don’t know, but we expect they’ll continue to support this initiative.”
The pandemic may have canceled last year’s competition, but many companies that previously won 43North awards are surging forward.
ACV Auctions, the homegrown startup that won the $1 million grand prize in 2015, ended up raising hundreds of millions in venture capital and went public earlier this year.
Circuit Clinical, a 2019 winner, shot past 50 local employees earlier this year after closing on $7.5 million in funding.
HiOperator, a 2018 winner, established 25,000-square-foot headquarters in downtown Buffalo this year.
Squire, a 2017 winner, recently raised $60 million in venture capital at a $750 million valuation.
Previous winners Kangarootime, Kickfurther, CleanFiber and others continue aggressive scaling plans in Western New York.
The foundation was created to answer yet another question: What happens when a 43North company reaches the startup finish line with an IPO or acquisition?
The answer is that the proceeds get funneled into the foundation, which then reinvests the money to support startups in Buffalo.
That could quickly make it one of the biggest philanthropies in Buffalo. The 43North Foundation sold 500,000 shares of ACV at its IPO price of $25 – a $12.5 million windfall.
It held onto more than 2.5 million ACV shares, according to documents filed with the U.S. Securities and Exchange Commission.
That makes the foundation a particular kind of curiosity – a looming economic force that has yet to wield its influence.
Maggio said it will ultimately be a mix of grants that support infrastructure-building initiatives around tech talent and resources, and equity investments into particular companies that are either moving or growing here.
“Our intention is to support the ecosystem and startups that want to build their businesses in Buffalo,” he said. “We are formalizing all the criteria as it relates to who we invest in and when.”
Maggio said that when you take a step back, the progress is marked.
“The fact that we have a foundation solely dedicated to supporting Buffalo’s startup ecosystem, I don’t think anybody thought would happen five years ago,” he said. “It speaks volumes to what we’re building here.”
Following this year’s finale, 43North will have more than 50 companies in its portfolio, including eight new ones. As the years passed, 43North honed its focus to more mature startups that have raised money, been through accelerator programs and can articulate a build-in-Buffalo strategy to judges.
“We’re not the first ones in anymore,” 43North President Colleen Heidinger said. “Our finalists have been through programs somewhere else that helped them elevate their game. They’re generating revenue in most cases, or have a clear path to it.”
This year will be the seventh 43North competition. Details have changed since 2014, but broadly speaking, it has always had a similar sequence. Shea’s has hosted every finale.
43North leaders have been asking themselves for several years whether the annual “Big Show” format will continue to prove popular. Maggio said the prestige of being a 43North company now rivals the actual cash award. Other accelerator programs are run successfully with different models – Y Combinator, for instance, invests $125,000 in exchange for 7 percent of all companies that go through its programs.
For now, Maggio said the community buzz surrounding the 43North finals has returned and that means things are working.
“3,000 people will be at Shea’s in October, which tells me people still want the big show,” he said. “The minute we sense we need to head in a different direction, we’ll change the production or change what 43North is.”
