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Editorial: 43North business competition is a winning idea

43North, the business plan competition that has put Buffalo on the map for entrepreneurs around the world, is in line for a major validation of its efforts.

HemoGenyx, a biotechnology company that was one of the winners in 43North’s first competition in 2014, is on the verge of a deal worth nearly $11 million with a British investment company. Because 43North takes a 5 percent stake in the winning startups, its potential return could be more than $500,000.

The transaction, if all goes as hoped, could have a game-changing effect on the company and give a nice financial and publicity boost to the contest.

HemoGenyx is developing new types of treatments for patients undergoing bone marrow transplants or blood stem cell treatments. It is still working on those products and so as yet has no revenues. But its work is promising enough to have attracted the attention of Silver Falcon Plc.

The business plan competition’s payoff remains to be decided in part because of the way the deal is structured in what is known as an all-stock reverse takeover.
43North will own a 3.1 percent stake in Silver Falcon, which formed several years ago as a vehicle for its founders to acquire companies. Silver Falcon plans to change its name to HemoGenyx Pharmaceuticals.

The deal could eventually prove to be a significant catalyst for the state’s own startup, 43North, which started four years ago as part of Gov. Andrew M. Cuomo’s Buffalo Billion economic initiative. The idea was to incentivize entrepreneurship in a community woefully lacking in it. In addition to turning over an ownership stake, winners have to agree to relocate a significant portion of their companies to Buffalo for at least one year. The hope there is that they will like what they see and stay on.

The state boosted that effort with its Start-Up NY incentive program, which created tax-free zones for new or expanding companies with ties to participating colleges and universities.

The 2015 winner of the contest, online automotive marketplace ACV Auctions, is headquartered in Buffalo and on its way to employing nearly 200 people.

The enthusiasm for the contest in the startup community has been palpable. Over the years, thousands of companies have vied for a shot at the $1 million top prize or smaller awards. Along the way organizers have continually made adjustments to make the competition more efficient and raise interest in the community.

This year the organizers decided to rearrange the process to build in more “Shark Tank”-like excitement at the end. The finals will be held from 6 to 8:30 p.m. Thursday in Shea’s Performing Arts Center in Buffalo. The event is free and open to the public, but tickets are required. See 43north.org for details.

Last year only the top three startups made pitches during the finals. This year all 10 finalists will make a two-minute pitch and answer questions from the judges for five minutes.
The seven judges include Eric Hippeau, formerly CEO of the Huffington Post and now managing partner at Lerer Hippeau Ventures, chairman of RebelMouse and co-founder of NowThis Media; and David Jakubowski, the director of publisher solutions at Facebook.

And the audience will get a chance to participate by voting a $10,000 prize to the People’s Choice.

Not every startup will be successful – far from it, in fact. Many will succumb because the idea wasn’t good enough, or the market just wasn’t there. Others face a lack of money or business experience, which is where 43North comes in. Besides the prize money, contestants will be able to network with potential investors and other entrepreneurs.

John Gavigan, 43North’s executive director, said more than 50 early-stage investing firms and individuals will be at the contest looking for opportunities.

43North’s entrants are dreamers determined to find solutions to life’s problems. The contest gives them the platform and the community collaboration to do just that. HemoGenyx is an example of what can happen.

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