Launch NY’s plans to help local technology firms and other startups is expected to be awarded a game-changing $5.4 million by the Western New York Power Proceeds Allocation Board on Monday.
Launch NY will use the money to create one of the largest-scale business plan competitions in the country.
“The vast majority of new jobs come from startups, not from multinational corporations,” said John Seman, CEO of Launch NY. “If we want to stimulate the economy and create more jobs, we need to improve the success rates of emerging companies and startups.”
The business competition is Launch NY’s first initiative to help fledgling companies by giving them the money and mentoring expertise they need to get off the ground.
“No one else is giving away $5 million. It’s going to create tremendous interest,” Seman said. “I think it’s going to attract applicants from other areas, but it’s also going to bring entrepreneurs out of the neighborhoods here.”
The majority of the money, $4 million, would fund prizes for contest winners. The other $1.4 million would be used to administer and market the program. Launch NY plans to raise an additional $1 million through major sponsors to fund further grand prizes.
Grand-prize winners will be obligated to stay in New York State for 12 months and may also be provided a year of free incubator space.
“When you’re giving away $25,000, you can’t really require someone to stay in the area. But when it’s $1 million, that’s a little different,” Seman said.
A nationwide marketing effort will seek contestants for the business plan competition. Applicants will submit business plans for technology and other startup companies,
Two of the most-well-known and successful business competitions, Boston’s Mass Challenge and one administered by Rice University, draw thousands of applicants each year. Buffalo’s competition offers more than twice as much prize money as both of those competitions combined.
“It’s going to put a huge spotlight on Buffalo,” Seman said.
The Power Proceeds funding comes from the New York Power Authority. Unused hydroelectric power allocated to companies through economic development initiatives is sold on the open market. That money is pulled back into a pool to benefit further economic development.
The business competition is an attempt at addressing the Western New York Regional Economic Development Council’s plan to create sustainable economic growth in entrepreneurship in the region. The council’s research has found that Western New York has had subpar small-business startups over the past decade, leaving the region without the type of economic boost that other parts of the country have been getting from fast-growing small firms.
The Power Proceeds Allocation Board is expected to make its final funding decisions Monday.