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A place to launch the tech sector

Jordan Levy and his partner Ronald Schreiber are looking for dreamers.

The tech entrepreneurs-turned-venture capitalists already have built two highly successful technology companies in the Buffalo Niagara region. Now, they want to help show other would-be technology entrepreneurs how it's done – and that it can be done in Western New York.

The two gentlemen are launching a new incubator for fledgling digital media companies in hopes of providing the spark that's needed to turn the region into a spot where young tech wizards with a dream can start a business and find the support – and access to financing – they need to get started.

"We just want to change the way young people think about Buffalo. If they want to stay here, they can do it without working at a bank," Levy said. "I want to help you follow your dream, but you've ?got to dream."

Too often, Levy said, those dreamers move on to other places, like New York City or Silicon Valley, where there's already a thriving community of techies, lots of capital and the sense that this is the place to be.

Levy knows all about that. His son graduated from the University of Michigan last month. On Wednesday, he started a new job – in New York City.

"I want to stop this outflow of young people," Levy said. "If we can create an ecosystem in Buffalo where, all of a sudden, there's a tech community ... then they can come here and they can see something good."

Levy thinks part of it is cultural, a strong sense of conservatism that favors the safe over the risky. "We don't have that infrastructure and the psyche of starting a business," he said. "They say ‘I'll just keep my job.' "

But that's not the way entrepreneurs usually work. Levy knows successful ones who knew the bitter taste of failure long before they finally hit on something that worked. "I know guys who have done three start-ups that flopped. But they've learned from each one," he said.

Schreiber's first business was built around microfilming doctors' records. He's called it a disaster, but it didn't stop him from joining forces with Levy to create a software distribution business that later was sold to Ingram Micro and a software upgrade marketing firm that was snapped up by Softbank.

Levy sees the incubator as his way of trying to do good for Western New York, much like Howard Zemsky's investments in Larkinville helped change the landscape of an entire neighborhood.

"It's about trying to do something that I think can have an impact," Levy said.

Schreiber and Levy, along with Softbank, are funding the incubator's day-to-day operations. A handful of local companies – from The Buffalo News and Synacor Inc. to Campus Labs and PC Business Solutions – are donating services and space for the incubator. The state is chipping in a $4 million grant that will be used to provide funding for companies that graduate from the incubator.

"It's a labor of love. It's not for profit. I'm not making money." Levy said. "Every bit of equity that the incubator gets is going back into it to, hopefully, keep it going in perpetuity."

There's certainly a lot of upside, mainly because the technology sector in the Buffalo Niagara region is stuck in low gear, packing less than half the economic punch locally than it does across the country. The local technology sector accounted for just 2.4 percent of the region's economic activity during 2010, which is just a fraction of the 4.9 percent share high-tech ventures make up in the national economy.

In addition, the tech sector has been growing nationally, expanding by 49 percent from 2001 to 2010. That's more than three times faster than the 14 percent growth in the information sector locally during the same period, according to data from the U.S. Bureau of Economic Analysis.

The local tech sector also has been a declining factor in the Buffalo Niagara region's job market. The number of information jobs, which stood at 7,400 last month, has plunged by a third since 2001 – a loss of 3,800 positions over the 11-year period as media companies struggled and Adelphia Communications met its scandalous demise, according to state Labor Department figures.

Still, those remaining jobs pay well, averaging $52,000 a year, which is 26 percent more than the $41,193 that the average job in the Buffalo Niagara region pays, according to the Labor Department data. But across the country, technology jobs pay far better, averaging around $74,400 a year, or about 43 percent more than the average information sector worker makes in the Buffalo Niagara region.

"We're lagging in the information sector," said John Slenker, the state Labor Department's regional economist in Buffalo. "That is an opportunity for growth."

Levy sees it, too. With Schreiber and Levy as two of Softbank Capital's seven partners, the venture fund has pumped money into 36 New York tech companies over the last seven years. "We haven't invested in one in Buffalo, and two partners live here," Levy said, although he laments passing on a chance to invest in local health insurance exchange firm Liazon.

Levy hopes the incubator can start to change that.

"Will it help overnight? No," he said. "But if we can get one or two companies to come out of it, then we'll be happy."?