The winners of this year's 43North business plan competition will have a shot at a bigger pool of additional funding after they spend a year in Buffalo, which could encourage more of those companies to stick around longer.
The organization on Thursday launched the public application process for the contest, which pays a $1 million grand prize to the first-place finisher in the first week of October. Six runners-up will receive awards of $500,000 each.
One change this year involves the amount of follow-up funding available to 43North winners a year later. At the end of 2019, the organization will offer a total of $1 million of follow-up funding, split among two or more winners of the 2018 competition.
In past years, a smaller amount of follow-up funding has gone to just one winner. For example, the 2017 competition's eight winners can apply for $300,000 in follow-up funding at the end of this year.
The 2018 competition's winners can apply for the additional funding, and 43North, its board and judges will determine at the end of next year who will receive it, and how much. The follow-up funding is financial fuel for emerging companies, while giving them another reason to stay in Buffalo beyond their one-year required commitment.
"I think for companies that are in that early stage of development, that incremental, follow-up capital after they've had a year of progress here in the community, can be just so important and instrumental to them," said Alexander Gress, president of 43North. "It further cements them here."
Gress has been serving in his role for about a month, after he succeeded John Gavigan. Gress's title has changed, from executive director to president. The competition is a creation of Gov. Andrew M. Cuomo's Buffalo Billion economic development program.
43North declined to say how many applications it has received so far, generated by referrals from sources such as investors and 43North alums. Applications will be accepted through May 31 at 43north.org.
Gress said the competition is keeping its focus on quality over quantity of applicants, as well as looking for companies that "really want to be here."
The "preferred profile" for 43North applicants are companies that have "raised independent capital, have sound business plans, and are demonstrating all along the way of that application process, a true desire to incubate here and recognize the value of what we can offer in that process," Gress said.
While the prizes are eye-catching, applicants are drawn to the entire package of a 43North award, including incubator space and participating in a mentorship program connecting them to local business leaders, Gress said.
Past 43North winners also serve as "billboards" for the competition as they grow, he said. ACV Auctions, which sold more than 5,000 vehicles online in March, has raised $31 million in funding. UltraCell Insulation recently wrapped up a $5 million funding package, and Tara.AI closed on $3 million of additional funding.
"You're starting to really see across the portfolio the dividends of this portfolio start to pay," he said. But Gress said he believes it takes 20 years to truly build an entrepreneurial ecosystem in a community. "We need to recognize we're still in the early stages, we're still in the early innings," he said. "We're just entering into year five [of 43North]."
By the time the final round is held in October, the field of applicants will be reduced. The contest format will be essentially the same as last year. About 15 finalists will make pitches to judges the morning of the event; the field will be cut by about half, culminating in on-stage pitches before different judges in the final. Seven competitors will come away with prize money.
43North is still finalizing the venue and the date, but Shea's Performing Arts Center has been the event's home of late.