Share this article

print logo

43North awards millions, but job goals are tough to realize

SparkCharge made bold job-growth pronouncements as the winner of the $1 million grand prize in this year's 43North competition.

Joshua Aviv, the founder and CEO of the Syracuse-born company, said he aims to have 90 jobs by the end of 2019, and 120 by the end of 2020.

"We're 100 percent dedicated to Buffalo, and we're here to hire world-class talent," Aviv told the judges in his winning pitch. Some of the other seven prize winners, who took home $500,000 each, also talked up plans to create jobs in Buffalo.

It's a common element of the annual competition. But none of the job promises are a guarantee.

The state has had a mixed track record in the five years since it started the business competition with money from the Buffalo Billion economic development program. Some past prize winners have left Buffalo after their required one-year commitment, while others are still in development. And then there are standouts like ACV Auctions, the 2015 champion, which has grown to 419 employees while expanding rapidly and raising more money.

To be sure, funding startups is a risk, as those fledgling companies cope with competition, building their operations and meeting customers' demands. As a Buffalo Billion-backed initiative, the 43North competition is scrutinized for its return on investment.

Syracuse-based SparkCharge wins $1 million prize from 43North

Critics have questioned the number of jobs generated by program winners, and point to some past winners leaving town after their one-year commitment was up. (43North takes a 5 percent equity stake in the winners' companies. And the rules call for winners to move 50 percent of their staff and their CEO to Buffalo for at least 12 months.)

43North awarded $20 million in prize money in the first four years of the competition. Company spokesman Nate Benson said that 23 of the 37 winners from competition years one through four — or 62 percent — still operate in Buffalo, and they have created more than 280 jobs here. Past winners have about 40 job openings posted on 43North's website, Benson added.

43North's proponents say the program not only attracts and supports startups, but has helped develop an entrepreneurial environment that the region lacked. William Maggio, past chairman of 43North, noted that after Facebook executive and local native David Jakubowski served as a judge in last year's finals, he followed up this year by helping launch Ignite Buffalo, a program that awarded 27 grants worth a total of $1 million to area small businesses, as well as mentoring opportunities.

SparkCharge founder and CEO Joshua Aviv delivers his winning pitch. (Mark Mulville/Buffalo News)

How much job growth should be expected from companies like 43North's winners? Thomas Ulbrich, executive director of the University at Buffalo's Center for Entrepreneurial Leadership, said the answer depends on the type of business. A venture such as a life sciences company might take years to validate its technology before it is ready to scale up its operations, he said. "On the other hand, a company that is driven with tech like an app of some type would be expected to scale much quicker."

All startups have potential to scale up, he said, some to hundreds or even thousands of jobs over time. "It is a numbers game, and if one out of 10 to 12 have great success, it will be a huge win for Buffalo."

43North has focused more on applicants that might prove a good fit for Buffalo, perhaps because of vendors they could work with here, or resources like the Buffalo Niagara Medical Campus or universities they could connect with.

This year's field started with 485 applicants. When it was all over, less than 2 percent of the initial pool of applicants won prize money.

43North president Alexander Gress has said while big money awards were eye-catching to applicants, so were other contents of the prize package: incubator space, mentoring and the opportunity to win follow-on funding. 43North said it wanted high-quality applicants with a true desire to locate here, rather than simply generate a flood of entrants.

Ulbrich said startup contests like 43North or UB's Panasci Entrepreneurship Competition are only part of the economic growth equation, but said those events "help create a culture of entrepreneurship." When people with ideas who have never started a business see those programs support early-stage companies, "they begin to believe they can do it and they try it," he said.

Ulbrich said he has seen a change in mindset about entrepreneurship in Buffalo over the past decade: "We have moved from, 'Woe is me, there is little to be hopeful for new business,' to, 'We can do this, and Buffalo is a place to move to, not to move away from, for budding entrepreneurs.' "

Fred Floss, an economist at SUNY Buffalo State, said 43North "gives us sort of an energy here to try to attract other businesses and to move on, and to try to have people think of Buffalo as a good, innovative place."

On the other hand, Floss said, "if we think that we are just going to be able to pick winners, and that if our goal is to make these huge, successful companies, that's probably not going to happen."

Floss said in order to keep winners from out of town, it's essential to give those companies support beyond just prize money; they also require regional suppliers and connections, as well as the ability to hire middle managers from here.

"I think it's a good start," Floss said. "The problem with any of these [programs] is that you have to get enough buzz with them over enough period of years. To say they haven't succeeded yet is probably a little too early.

"If we're here in another five years, and this doesn't get a lot more people coming, then I'd have to say we'd need to start to look and ask the question, has its time run out and do we need to try something else?" Floss said. "But at this point, I think it's too early to say that."

Lindsey Tropf, CEO of Immersed Games, which won $500,000. (Mark Mulville/Buffalo News)

During two rounds of 43North judging on Wednesday, some of the contenders stressed how Buffalo would fit into their plans.

One of the new winners, LegWorks, a maker of prosthetics, already had moved its base of operations to Buffalo from California, before entering the 43North competition. Immersed Games, a Florida-based company which produced a video game to promote careers in science, technology, engineering and math, wants to connect with the Buffalo public school system.

SparkCharge has upstate roots. The company pitched its portable charging stations to serve the electric vehicle market.Gress said SparkCharge was "a great example of Buffalo continuing to invest in innovation, invest in entrepreneurship. And I think companies like SparkCharge and all of our winners tonight represent the next generation of companies here."

For all of the 43North winners, only time will tell if the reality of their job growth matches their ambitions.

While the newly minted 43North winners got the attention this week, two members of the 2017 class, Kangarootime and Femi Secrets, said they have fared well over the past year, and are adding jobs. The two companies will share in the $300,000 in 43North follow-on funding that the 2017 class of winners could apply for.

$1M is no sure bet: Here's where 43North winners are today

Story topics: / / /

There are no comments - be the first to comment