It’s hard to track specifically when a movement begins, but for these purposes, let’s start with 2012.
That’s when the Z80 Labs incubator opened in downtown Buffalo, as a front door for the region’s nascent scene of startup builders and software tinkerers.
Those were the days when people would look around to make sure the startup people were still there. It felt as if they might float away – maybe to other cities – or at least blend back into the allure of corporate stability.
Instead, the movement grew.
In Buffalo, year upon year, new waves of investment and attention came from the business community, the state government and from philanthropic sources.
There have been some failures.
But slowly, the engine of activity creaked to life. Last year, more than 35 locally based companies raised more than $530 million, collectively. Deal volume has picked up even more this year: the 26 locally companies that have raised money include Buffalo-headquartered Centivo ($30 million), Circuit Clinical ($29 million) and Kangarootime ($26 million), all with aggressive growth plans locally.
Around the companies, many stable pillars of support have been established, from 43North to Launch NY to the University at Buffalo’s startup initiatives. From BootSector to the Buffalo Angels to the Western New York Impact Investment Fund to TechBuffalo. There are real estate strongholds, including Doug Jemal’s sweeping transformation of Seneca One Tower into a live-work-play-educate mixed-use development.
Numerous major stories encircle the local startup community, including M&T Bank’s large-scale tech hiring push and its $58 Tech Hub in Seneca One; business software company Odoo’s rapidly growing presence in Buffalo; anti-money laundering company AML RightSource’s ascension as a major employer in Buffalo; and Bitwise Industries’ recent decision to establish a tech campus on the city’s East Side.
Buffalo’s tech scene is now bigger than any one individual or group – it's a sustained paradigm with ambitious projects at every level of development.
How did all of this happen? In chaotic fits and starts, mostly.
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The movement started on the ground, as a few successful startups in the aughts (Synacor, Campus Labs, Liazon) served as proof point to a new generation of young professionals that it could be done in Buffalo. As the economy staggered out of the 2008 recession, suddenly that same group became the force behind other unique projects: CoworkBuffalo, Startup Weekend and Buffalo OpenCoffee Club, among them.
At the same time, a group of business and civic communities were meeting in the lengthy named Western New York Regional Economic Development Council, convened by former Gov. Andrew Cuomo to compete against other regions for state economic development resources.
That work led to the announcement, in Cuomo’s 2012 State of the State address, of the Buffalo Billion program that would make flagship state investments in key economic areas. The Buffalo Billion has a mixed legacy, to say the least, and that’s before the discussion about Cuomo’s 2021 resignation in the wake of sexual harassment allegations.
But it had its moments as well. One of the first Buffalo Billion projects was 43North, an annual startup business competition funded by New York state. It was an extremely ambitious idea – the state would give out $5 million in prize money each year to a collection of startups moving to Buffalo or already growing here.
That is exactly what has happened since 2014, with an annual finale each October at Shea’s Performing Arts Center where a new class of 43North winners is minted (with the exception of the canceled 2020 program).
43North has indeed made about 60 investments in startup companies over the years, some of which left or failed, but many that are still doing well. But its impact is bigger than the competition itself. In the face of something as small and tenuous as a startup movement in Buffalo, 43North has been a source of consistency. And with a team of employees who fan throughout the country each year, it has also become a bullhorn more broadly for Buffalo as a place to consider when doing business.
Lots of places in the United States have stuff that Buffalo doesn't. But none of them has a 43North, either.
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In 2014, the former head of Z80 Labs, Dan Magnuszewski, teamed with Joe Neiman and Jack Greco to found a company, ACV Auctions, that went on to win the $1 million grand prize in 43North in 2015. The company collected checks from numerous angel investors before venture capitalists stepped in, and eventually raised more than $300 million in private funding, becoming the region’s first software unicorn. ACV went public on the Nasdaq stock exchange last year – the first startup IPO in Buffalo since 2012.
ACV is an anecdote toward the broader thesis of a startup flywheel, the idea being that one successful company branches out into other interesting projects. It led to the creation of the 43North Foundation, which was critical in attracting Bitwise. Magnuszewski is now building a local office for Rochester-based bitcoin company Foundry Digital and Greco is an active angel investor.
During the span between ACV’s founding and its IPO, the overall startup scene here made steady progress. Locally based startups raised approximately $110 million in 2016, $208 million in 2018 and $206 million in 2020 during the throes of the pandemic. Bolstered by funding from Ralph C. Wilson Jr. Foundation, Launch New York built several robust investment vehicles for supporting startups in central and western New York. The Western New York Impact Investment Fund – backed by local philanthropies and wealth private individuals – debuted in 2017 with an $8.15 million fund and announced earlier this year it has raised a new fund of approximately $12 million.
Stories about startups or tech companies moving here became routine. Bay Area-based automotive “super app” firm Jerry opened an office in Lockport a few years ago; it now has Jerry’s biggest concentration of employees with more than 100. Kyklo moved from Bangkok to Buffalo in 2020 and proceeded to raise $8.5 million. Rural Sourcing announced last year it would open one of its software development hubs in Buffalo.
There’s a rapidly growing ed-tech company in Orchard Park. There’s a startup incubator in Hamburg. There’s a business accelerator at St. Bonaventure University. There is a drone-based software-as-a-service startup, a vertical farming startup, a lithium ion battery pack startup, yet another automotive wholesale software startup, a mission-based but high-growth startup for college students, a blockchain-enabled payments startup, an “Airbnb” for barbershops and stylists, a women’s hair care startup, a consumer-facing tea tree oil startup and a sleep apnea startup – and they’re all funded.
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Why is all of this important?
In economic development terms, it’s about building a new source of business vitality, importing wealth from other regions (as opposed to other local strongholds like health, education, government and professional/financial services) and appealing to the youthful demographic for which this region is starved.
For the entrepreneurs and investors, it’s about redefining concepts of success and risk in Buffalo. In a town known for its conservative business culture – where the best and brightest have long plied their trade within the relative safety of large corporations – each startup company is its own harrowing adventure.
Broadly speaking, it’s been about building a city that is competitive within 21st century business norms, capable of dynamism and excitement.
The startup tech movement is much bigger than Buffalo, of course, and there are many U.S. cities with more robust tech economies. But compared to 70 years of economic gloom? To the decades of discussion about the Bills leaving? To the collapse of the steel industry? To Bass Pro? To every-10-years reminders of dramatic population loss?
Compared to our own history, the future is finally here.
