The 43North Foundation will seek to leverage the notoriety of its namesake competition to attract new generations of entrepreneurs to Buffalo.
It will make equity investments into their companies and support them as they seek to grow.
That’s the plan, at least, according to the person tabbed to lead the effort. The work begins now in making it a reality.
“After the success our companies are having, we believe that the status of being recognized by the 43North brand will be just as important as the money to these young entrepreneurs,” said William Maggio, a 43North board member who will lead the foundation’s board.
43North was an idea that came out of the Western New York Regional Economic Development Council, and debuted in 2014 as a state-funded annual competition that sought to attract a collection of startups to Buffalo each year. Winning companies give up 5% of their company for investments that range from $500,000 to $1 million.
Plenty of 43North winners have plateaued, moved away or shut down (which isn’t a total loss since 43North retains its financial stake), but the portfolio has shown signs of significant maturation in the last few years.
Highlights include Squire Technologies, which raised nearly $100 million in venture capital last year; HiOperator, which brought on hundreds of employees in Buffalo in only a few years; Circuit Clinical, a homegrown health care tech firm that recently closed on $7.5 million in funding; and ACV Auctions, which went on to raise nearly $300 million in venture capital and went public this week.
But with successful startup investments come liquidity events, and the question about what happens when 43North makes money has lingered for years.
The answer is that it will be reinvested in the community, Maggio said. All proceeds from 43North’s portfolio will go to the foundation, which is dedicated to fostering high-tech startups in Buffalo.
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43North was set to sell 500,000 of its ACV shares during March 24’s IPO, capitalizing the foundation with approximately $10 million to start. 43North still has 2.5 million ACV shares, which it will be able to sell after a six-month lockup.
Maggio said the state is expected to fund the competition for two more years, as it has proven to be an effective economic development tool.
But he said the competition won’t necessarily last forever in its current form. As ACV, Squire, HiOperator, Circuit Clinical and other promising companies carry the 43North story throughout the U.S. and beyond, he said the program’s pedigree will rival famous accelerator programs such as Y Combinator.
The foundation board includes several 43North board members: Pete Grum, Eric Reich, Ronald Schreiber and Jordan Levy. Maggio said now that ACV has officially gone public, work will begin to round out the board’s diversity and build the foundation’s brand.
He pointed out that if ACV’s success is replicated in other fast-moving companies, the entity could quickly become one of the largest foundations in Buffalo.
“Our objective is to invest this money back into actual startups,” Maggio said. “We’ll be looking for diverse entrepreneurs in tech and med-tech who want to build their company in Buffalo.”
