The first clue that ASi was scoring points with the 43North judges came early, just minutes after founder Glenn Thomas finished pitching the Town of Tonawanda metal-forming company to the panel.
Esther Dyson, one of six judges and a venture capitalist who trained to be a backup cosmonaut five years ago and sits on the board of a company that makes rocket ships, was intrigued by Thomas’ claim that ASi’s system could help aviation firms by making parts lighter and stronger.
“Whether you win or not,” Dyson told Thomas before he left the stage at Shea’s Performing Arts Center on Thursday morning, “I’ll take your business card.”
ASi did win the $1 million first-place prize, six other finalists won $500,000 each, and four others won $250,000 each.
Now that the contest is over, the next challenge for 43North’s organizers is providing all the support the new ventures need to build connections and their businesses here – and to convince them to stay in the Buffalo Niagara region after their one-year commitments are up.
The selling of Buffalo began in earnest last week, when the finalists arrived in advance of Thursday’s pitches. The finalists took a bus tour of the region on Tuesday, meandering through the city’s neighborhoods and being introduced to the city’s architectural heritage. They stopped briefly in Niagara Falls and spent time with local mentors who have agreed to provide help and support to the finalists.
“I’m amazed at how inexpensive things are here,” said Marc Ramer, the chief executive of Miami-based Asana Medical, which is working on a new treatment for ulcerative colitis. “I’m impressed by the buzz within the community and the sense of pride within the community.”
Vladislav Sandler, the co-founder of HemoGenyx, a New York City medical company working on new treatments for leukemia and lymphoma that would improve the results of bone marrow transplants, said he was impressed by the reception the 43North finalists received.
“The community wants me,” he said. “I’m not one of 500 companies in a big office building.”
The contest, part of Gov. Andrew M. Cuomo’s Buffalo Billion initiative, is aimed at addressing one of major shortcomings that local development officials had identified – a lack of entrepreneurs and business startups in the region. By offering a total of $5 million in prizes – and a wide range of lucrative side benefits – that were bigger than those offered by any similar contest, the idea was to create a buzz around the competition that it would attract entrepreneurs who otherwise never would have considered the Buffalo Niagara region. In return, the state gets a 5 percent stake in each venture, which must agree to move to the Buffalo Niagara region for one year.
“It’s a long-term play” to put Buffalo on the map for start-ups, said Andrew Pulkrabek, 43North’s executive director.
In the end, the 43North judges generally favored finalists with ideas that had advanced further in the development process.
ASi is ready to take orders. EcoBreeze, a Taiwan start-up that is developing a fan-less cooling system for electronic devices that is quieter and far more energy-efficient than rotary fans, said it has been in contact with companies that make microprojectors about its product.
Eulysis UK Ltd. received early backing from the Gates Foundation for its system to store and ship drugs in a single vial that mixes its freeze-dried ingredients with the liquid component with a single push to break a membrane separating the two.
Eulysis’ founder Ross Tsakas estimated that it could take another nine months to prove to regulators that the Scottish company’s product works as well as conventional methods. Its single-vial delivery system doesn’t require additional studies to receive regulatory approval.
As a result, Tsakas estimated that the company could be generating revenue within a year, and while it would initially license production to other manufacturers, Eulysis plans to start making its product itself within four years, potentially employing up to 100 people at a factory that could be located in Buffalo.
The judges also looked favorably on New York companies. ASi won, while $500,000 went to Medical Conservation Devices, a Batavia start-up working on a less expensive anesthesia machine that can be hitched to a ventilator and would allow inhaled anesthetics to be used on patients in intensive care, where intravenous anesthetics are the norm.
Raland Therapeutics, a Fairport company developing an implantable biosensor, based on technology developed at the University of Rochester, that would allow physicians to develop more precise doses for chemotherapy patients based on how their bodies are reacting to the drug, also won $500,000.
Among the four companies that received $250,000 prizes, three were start-ups in the medical industry, where regulatory approvals require rigorous documentation and lengthy clinical studies that typically take many years to complete and often cost many millions more than initially expected.
The other $250,000 prize winner, the developers of the KeepUp app for managing multiple social media news feeds, drew some of the most critical questions from the contest’s judges over the challenges of building an audience for a new app in a hotly competitive market. Venture capitalist Kenneth Lerer also challenged the company’s projection that its revenues could reach $250 million within five years.
“I think your revenue numbers are way off,” he said. “You should bring them down a ton. ... They just don’t ring true.”
The judges ranked companies on a set of criteria, ranging from the promise their product holds to how it fits within its market and the strength of the company’s strategy and its personnel. But the judges also considered how much impact the company – and the size of its prize – would have on the jobs that the business would potentially create in Buffalo and the affect it could have on the local economy, Dyson said.
Each of the 11 finalists in the 43North competition that concluded Thursday thinks they’re on to something big. One finalist thinks it is developing a treatment that could help the millions of people who suffer from debilitating ulcerative colitis. Another believes it can eliminate the rejection risks and difficulties in finding compatible donors for bone marrow transplants. Another is working on a way to take the kinetic energy from slowing cars and trucks and turn it into electricity.
“It was a nice diverse collection,” Dyson said after the judges had made their selections.
“If you invest in 11, that gives you the opportunity to be lucky, even if you’re not smart,” she said.
ASi’s system pounds metals into a mold at such a high impact that the shock waves created by the collision turn the metal into a gel-like state for an instant. That transformation allows the metal to be quickly pushed into a mold and strengthens the material at the same time.
Stronger materials would allow ASi’s potential customers to make their components thinner and lighter – a big concern for the aerospace and automotive industries – and Thomas said the company’s process is cheaper, too.
ASi recently won its first order for steel tube liners from a Texas energy company, and its bid undercut a Chinese competitor by 25 percent.
“It’s really 21st century technology,” Thomas said. “It works, and it works well.”
That resonated with another 43North judge, Forbes magazine editor Randall Lane.
“At the end of the day, if this is as good as you say it is, that’s the next big thing,” he said.
Thomas projected that ASi could generate $170,000 in revenues next year and reach $52 million in sales within five years.
The company, which now has four employees and two consulting engineers, plans to use the 43North prize money to hire a business development executive and a controls engineer. He projected that the company could have around 40 employees within five years, about half working on the factory floor at wages of around $25 an hour.
“I don’t think there’s any technical risk. We’ve beaten it down,” he said. “It’s more market risk and execution risk.”
The company currently has one metal forming machine at its 5,000-square-foot facility at 171 Cooper Ave. and initially planned to bring on a second one within three years. The 43North prize could accelerate those plans, Thomas said.
“We’re so excited,” said Ted W. Cadwallader, an ASi finanancial adviser who was a prominent leader in the Pro Life movement in the Buffalo Niagara region during the 1990s.
ASi’s lease is up at the end of the year, and Thomas said the company likely would move its administrative offices to the Thomas R. Beecher Jr. Innovation Center, north of the Trico plant on Washington Street, along with the other 43North finalists.
But its manufacturing operations are not compatible with that space, and the company ultimately would be interested in 8,000 to 10,000 square feet of manufacturing space, Thomas said.