For years, one of the big voids in the Buffalo Niagara economy has been its dearth of entrepreneurs willing to take a chance that could turn a good idea into a thriving business.
Now, the state is putting up $32 million over five years to provide funding for those entrepreneurs and give them the work space and support services they need to build a successful business.
The Innovation Hub was first proposed in January 2017 as part of Gov. Andrew M. Cuomo’s Buffalo Billion II economic development initiative. But it wasn’t until Tuesday that the hub’s funding was approved by the Empire State Development board of directors. Cuomo announced the funding during a stop at the Buffalo Niagara Medical Campus on Thursday.
The hub will target new products and technology – much of it likely to come out of the University at Buffalo or the Buffalo Niagara Medical Campus – at the earliest stage, filling a large gap in the Buffalo Niagara region’s improving, but still small, venture capital funding network. Those very early stage investments are extremely limited in Western New York and often is the hardest money for entrepreneurs to raise, UB officials said.
With more than $400 million in research funding flowing to UB and other local institutions each year, local economic development officials, led by Empire State Development CEO Howard Zemsky, have long said the Buffalo Niagara region doesn’t get enough bang for the buck when it comes to turning that research into commercially viable products that generate jobs locally.
“We don’t see enough of those commercialized here,” said Christina Orsi, UB’s vice president of research and economic development. “One of the reasons is the lack of that first-time, early-in funding.”
Beyond that, the program will add another 25,000-square-feet of incubator space at the Center of Excellence in Bioinformatics & Life Sciences – enough space to accommodate about 30 startup companies that can share a collaborative work space and take advantage of the site’s wet labs and other equipment, state officials said.
Beyond UB, the program will have ties to research institutions such as Roswell Park Comprehensive Cancer Center, the Hauptman-Woodward Medical Research Institute, the Jacobs Institute and Kaleida Health. The hub is designed to take ideas and new developments coming out of those institutions and provide the funding and resources needed to, first, prove the validity of the new concept or product and then provide very early stage funding for those ventures.
The startups that will be part of the hub are likely to be new businesses, in contrast to the more established startups that are the focus of the 43North business plan contest that provides $5 million in prizes each year to promising ventures that have already made considerable progress in launching their business.
“We’re starting at the idea stage and helping those ideas develop,” Orsi said. “43North is about attracting existing startups and getting them to come to the region.”
The $32 million in funding, spread over five years, will include:
- $13.5 million for an early stage technology commercialization fund administered by UB that will help the startups prove their concept and offer early seed funding. Investments could range from as little as $25,000 for the earliest stage startups to as much as $1 million in follow-on funding for startups that have made more extensive progress in developing their product and business.
- $11.5 million for support programs and services for entrepreneurs, as well as funding for the personnel and administrative services needed to run the hub.
- $7 million to design and build new incubator space at the Center for Bioinformatics and Life Sciences on Ellicott Street. That space is expected to open by the end of 2019, Orsi said.