Buffalo Bursts onto the Startup Scene

Buffalo, N.Y., has been hard at work making a name for itself. There have been some tough times, like a mass shooting in May and a brutal blizzard just before Christmas that caused dozens of fatalities.

Then came the NFL game, where a harrowing on-field injury to Buffalo Bills safety Damar Hamlin gripped a nation of sports fans watching the first Monday Night Football telecast of 2023. Fortunately, Hamlin is recovering, and as of this writing, the Bills have just won their first playoff game.

We spoke with Maura Devlin, VP of Marketing Strategy and Public Relations at 43 North, a startup accelerator in Buffalo, and Jack McGowan, Executive Director of Western New York Venture Association and Buffalo Angels, about their respective work to attract technology businesses to the area.

Archie: What sparked your interest in growing the tech sector in Western New York and Buffalo?

Jack: There are a few trends. One is the mindset. We’ve been down for a couple of decades, and it became a drag on the community outlook. That’s begun to change. A big part of it is the Buffalo Billion program started by Governor Cuomo, where the state funded various initiatives in the greater Buffalo region to not only provide capital, but also to try and change that mindset and make it more positive. We were Rust Belt, we were snow, we were chicken wings. We’re still proud of those, but there’s a story here. We are getting the national media appreciating the turnaround story and a high quality of life.

Maura: 43 North came about in 2014 as part of the Buffalo Billion initiative—Cuomo’s answer to the question of the time of: ‘How can we drive economic development in the city?’ There was the concept of, ‘Let’s launch the world’s biggest startup competition’ and use that as a vehicle to attract companies to bring their businesses here to grow. A lot has changed since then; we now have 64 companies in our portfolio at 43 North and they have collectively raised over $1 billion. While that’s an impressive figure, one of the reasons we were created was to create jobs here. In 2022, our portfolio companies collectively surpassed the 1,000 jobs mark.

Archie: What factors are driving tech businesses to come to this part of the state?

Jack: When I graduated college, there was a movement away from the region, but the narrative has changed now. Buffalo now has a bit of a cool factor, and the downtown area has had a lot of revitalization. The quality of life is much higher, and it has become more attractive for young people to stay if they’re here in the first place, or in a lot of cases, to come back. We as Buffalonians are proud of the city, and every time you see someone from Buffalo there’s a feeling of, ‘Give me a good reason to come back.’ In the 2020 census, the population started to grow after 50 years of population decline. It’s a very easy place to live, and the cost of living is very affordable for housing. We were the eighth largest city in the country in 1900, so we’ve got a lot of institutions and infrastructure for a modest population, so you can take advantage of all this stuff.

Maura: We spend a lot of time outside of Buffalo, and pretty quickly you hear, ‘Buffalo is chicken wings and snow.’ But maybe you’re building your business in New York City and you’re thinking what it could do for you to come to a mid-size city like Buffalo. Suddenly, instead of being one of the small fish, you can be one of the bigger fishes and have all the amenities that a big city has to offer, but they are so much more accessible. We get all the concerts that the big cities get, all the restaurants, there’s a really great food scene here. Those kinds of things exist here, there’s just more access here. Another thing for business is the talent war. The cost of talent and talent wars are a real thing. It’s really helped us; we’ve seen significant growth in our jobs created here just from our portfolio companies. Those are signals that we’re attracting people here and it helps get other people open to coming here.

Archie: The 43 North tech competition has brought a lot of tech businesses to Buffalo. What type of startups are you looking for?

BUFFALO COMPANIES TO WATCH

Maura Devlin and Jack McGowan give some love to the locals.

Circuit Clinical is a 43 North winner in the healthcare IT space. They have investment and collaboration with Labcorp and other partners. This is an example of how our companies look for anchor partners that have established brand names that they can align with and provide services to. Squire, which is quasi-Buffalo. This is IT for the barbershop industry. They were attracted here by 43 North, who drew them here for a year and they then said, ‘We want to stay here, this is a good place to do business.’ The founders don’t live here, but a major part of the business is based here. Kangaroo Time. They are a childcare software company. Scott Wayman,  the CEO and founder,  has a unique story of where he was in his own growth and how the 43 North competition really saved his business. We produced a documentary on Scott’s story. which you can watch on the For the Love of Buffalo video. Odoo is a Belgian software company that grew their East Coast outpost here in Buffalo very intentionally to grow their team. They now have over 300 employees on the ground here, and during that time they hit unicorn status.  Twipes was based in London, but moved here after winning material for flushable wipes. They’re a CPG company that uses tech to build flushable wet wipes. Spark Charge started in Syracuse. They do remote electrical vehicle charging units. Their headquarters are in Somerville, Mass., but their manufacturing is here in Buffalo, so they’re another dual-location firm. They received $1 million from Mark Cuban and Lori Greiner on Shark Tank a couple of years ago.

Maura: We’re a global startup competition. We invest $5 million annually into seed-stage startups. Our competition typically launches in the spring in May or June. It’s usually about a six-week application period and then the next few months doing due diligence. It all culminates in a Shark Tank-like event, which takes place here. Companies come to Buffalo and pitch live in front of 3,000 people in a theater. We ultimately select who we are going to make those investments in. 

Archie: And the winners of the competition have to move to Buffalo?

Maura: Yes, part of the agreement involves the winners moving their businesses and lives to Buffalo. We spend the next few months getting them ready—we even have a dedicated team member assigned to help these companies get settled and acclimated, to see the side of Buffalo outside of the four walls of their office, to get to know all those amenities we talked about. It’s a unique outlet that gets them to fall in love with our city. After a year they’re free to go, but we have a 60% retention rate. They’ve become accustomed to a lifestyle and a decent-sized house for a price they can afford. Given our success to date, we don’t have to hide behind the fact that this is happening in Buffalo. Now, we’re really proud to say, ‘This might not be for you.’ We want people who want to come here, who want to grow their business here.

Archie: Do you collaborate well with other areas of Western New York and the state?

Jack: Everybody in upstate—whether it’s Buffalo, Syracuse, Rochester, Ithaca, Binghamton or Albany—bemoans that we’ve got these silos. We don’t work together as much as we think we should. We are quasi-separate, although there are some collaborations, as we at Buffalo Angels will share and look at deals with Rochester Angels. Buffalo is a little bit larger, but those other areas don’t operate in our shadow.

Maureen: When it comes to a region like Rochester, we’re really looking to partner with them. There’s a lot of momentum in the startup and entrepreneurship space in both regions, so rather than compete with one another, we are an hour’s drive down the thruway, so our approach is, ‘Let’s build those bridges and partnerships with each other.’ In terms of 43 North and other accelerators in the area and throughout the state, we do collaborate frequently. We visit each other’s incubators, we have monthly calls where we share best practices, so this whole thing that makes this ecosystem click is you need to have these collisions, these collaborations, and they can happen pretty organically. We sit in Seneca One Tower, Buffalo’s tallest building. An investor developer came from outside the city and bought the tower and brought it back to life. He put a stamp on it, saying it was going to be Buffalo’s tech center of gravity. We take up one floor of 38. M&T Bank has their tech hub there and they have 13 floors in the building. It’s huge in that this drives the collaborations between like-minded talent and people.

Archie: What kinds of tech companies do you think do well in the region?

Maureen: When we look at companies, we have a set of criteria, and one of the most important things is that it’s a company that we think is well-suited to build in Buffalo. It could be space to build a product, it could be people. If you take a close look at what Rochester is doing, you’ll find a lot of things that tie back to the business that made them tick—you look at Eastman Kodak. Whereas with Buffalo and our approach at 43 North, we are industry agnostic; our companies come from all different backgrounds and focus. There’s also a bit of fintech presence here, as M&T Bank has taken a role in becoming an accelerator of their own. They committed to hiring 1,000 technologists in Buffalo, but they’re doing that really to service the larger community. They’re thinking beyond their own self-interest and more about the region and how we’re going to be stronger together.

Jack: Most of our companies trend around B2B software helping companies do business together rather than revolutionizing things, but we do have advanced manufacturing. 

Archie: To what do you attribute the success of ACV Auctions and Tackle, the two unicorns linked to Buffalo?

Jack: With ACV Auctions, you had three co-founders, one who knew the auto industry because his dad was involved in the sector. Another was a guy directly from the auto business, and the third person was the finance guy with some stints in VCs. They had the right connections, and some early mentors who were successful themselves. They raised their first million-dollar round here and were first place winners in the 43 North competition. Then, they executed. When they first went to out-of-town VCs, they had the situation of being known as a Buffalo company: ‘unsexy,’, ‘regional’ and ‘car-focused.’ But they were able to successfully raise a few rounds and continue their growth and had a successful IPO. They brought in a new CEO who had already built a company in Buffalo that went public before that. And locally, people were thrilled because they saw, ‘Hey, see, it can happen here in Buffalo’ with local, upstate New York guys with Rochester, Albany and Buffalo roots who could make it work.

With Tackle, it’s a model that works. It’s an example of where we have a few other companies in town, where their headquarters are elsewhere, they’ve raised significant money from VCs from around the country, but largely because of people and the workforce here they have a meaningful presence in the Western New York region, so we count them as our own, but they are a major contributor to the region. Tackle has a presence here, their president is here, but a lot of co-founders are out west in Idaho, so it’s not as much of an awareness as with ACV.

Archie: With all of this recent growth, you must feel excited for the future.

Jack: A few years ago, the amount of VC in Buffalo-area companies was about $100 million a year. Last year we cracked over $500 million, and that includes companies that are not necessarily headquartered here but have a meaningful presence. The growth has been great.

Maura: I was born in Buffalo and grew up in Buffalo. We’re really passionate about our city and the work we do. It’s a really special opportunity to do something that’s helping to move the city forward and bring it back to a place of success that we all believe could happen here. It wasn’t exactly like that when I was younger, so to see the progress is great. I moved away after college and when I left I didn’t think I’d come back. Then the way I started to see some of these things unfolding, I wanted to come back, I wanted to be a part of it.

Archie: It seems that Buffalonians come together to overcome tragedy—and there has been a lot of it lately. 

Maura: Yes, and you think about the aftermath of what happened in that storm. And there was the shooting in May, it’s sad. The city shows its resilience for each other. We have this nickname, the City of Good Neighbors, and when those things happen it comes to life so quickly and you realize how authentic the nickname is. It’s just people’s natural inclination here to just go and help other people. To see the good that comes out of it, it just makes you proud to be from Buffalo.

Archie: Is this the year that the Buffalo Bills make a return to the Super Bowl?

Maura: Go Bills…always Go Bills. I could get choked up talking about this, Paul, but I was at that game. I was in Cincinnati [on January 2, when Hamlin suffered a cardiac arrest on the field]. It was really hard to watch for so many reasons because that’s a life on the field, but also the connection that this community has with the Buffalo Bills—it’s unlike anything that I’ve seen. It’s really special to just see that magnified and just see the love and support that came from around the world. It’s so awesome that he seems to be recovering.

Editor’s note: Maura's Buffalo Bills lost their playoff game to the Cincinnati Bengals on January 22, dashing her hopes once again for a run to the Super Bowl.