Starting a company is like climbing a mountain. It’s a high-risk endeavor where one false step can mean the difference between planting your flag at the top or plunging into obscurity.
ACV Auctions, the tech startup featured in Sunday’s News, is looking pretty sure-footed. The company, maker of an app used by car dealers to buy and sell used cars, has created 300 jobs in Buffalo, close to 700 nationwide.
Joe Neiman was a car dealer who was tired of driving to auctions. Dan Magnuszewski, a computer engineer and UB graduate who had several technology jobs in Buffalo, was searching for startup opportunities.
They had the foresight, and appetite for risk, to co-found ACV Auctions, with another partner who has since left, and their company is positioned to become what may be 43North’s first great breakout star and a real feather in Buffalo's cap.
ACV Auctions was the $1 million grand prize winner in 2015, the second year of 43North’s startup competition. Some top prize winners in the five years of 43North’s contest have faltered, while it’s been a struggle to get others to stay in Western New York following their one-year contractual commitment.
By contrast, the home-grown ACV Auctions has shown real staying power. George Chamoun, who founded Synacor while a student at UB, came on as an investor and is now ACV’s CEO.
The numbers tell an impressive story.
In 2008, the value of investments in all of upstate New York’s early-stage startups was just $1 million.
This past December, ACV completed a $93 million funding round, the largest single investment ever in a tech company from Western New York. The company has raised $147 million total in venture capital and is valued at more than $600 million.
If ACV’s ascent continues – it is shooting to become Buffalo’s first $1 billion software firm – that would make some upstate investors very happy.
According to tax documents reviewed by The News’ Caitlin Dewey, Series A investors in the company have gotten a 1,600 percent return over the last two years. New York State is one of the investors, along with many ACV employees. That means ACV could create more than jobs here – it could create millionaires.
ACV’s rise was aided by a financial boost from state government. The company received a combined $1.9 million in state investment via the Innovate NY fund and 43North, which itself is a creation of the Buffalo Billion. Many of its employees do not pay personal state income taxes. However, if ACV’s employees prosper, they will pay plenty in federal income tax along with local sales tax and property taxes.
The venture capitalist Marc Andreessen wrote in a famous 2011 essay that “software is eating the world,” taking over large swaths of the economy. ACV doesn’t need to go that far, but its hunger for success in the software business is worth paying attention to.