Woody Maggard knows a few things about taking good ideas and turning them into viable companies.

Maggard, now the associate vice provost at the University at Buffalo, has founded or managed a smattering of companies over the years. He has helped develop research parks in Florida and Delaware and worked on early-stage venture capital funds in Delaware and Arizona.

When he looks around New York, he sees a state that does a great job – and is very generous—in funding research and development work. But he also sees a state that does very little to help companies get over the challenging hump that takes new technology and turns it into a commercially viable business that creates jobs and has the chance to grow into something even bigger.

“It’s not that we don’t invest enough in research and development,” Maggard says, noting that New York ranks among the top two or three states in research and development funding.

“But relatively little is being done by New York State to capitalize startup companies,” he says. “We’re not capitalizing on one of the state’s greatest economic assets.”

The consequence of that funding void is that too many fledgling companies that try to capitalize on the fruits of that R&D funding end up running out of money before their businesses can get off the ground.

Others simply head to other states, like Texas and Utah, where state-backed programs offer them a greater chance of finding the seed funding they need to get through the so-called “valley of death” between the spawning of a good idea and its transformation into a business with its own revenue stream. Only at that point are many of these companies finally able to attract the venture capital they need to grow.

“The problem in New York State is that so many early stage companies struggle and die on the vine,” says Alfred Culliton, the chief operating officer of the Erie County Industrial Development Agency, which has its own venture capital fund to help early-stage start-up firms.

Despite the worsening budget crisis, Maggard thinks it would be a great investment for New York to set aside $43 million to help fund promising start-up firms—$6 million to be targeted at technology developed at the university level, and $37 million in a broader statewide fund.

That would allow the state to help dozens of companies get across the “valley of death,” even if it’s just a fraction of the investments Texas and Utah are making. The public funding also could help lure matching investments from private investors.

“There’s such a dire need,” Maggard says.

The capital shortage is particularly severe upstate, says Michael J. Manikowski, an Ontario County development official and the chairman of the New York State Economic Development Council. He also calls for a state seed fund for fledgling tech firms, but in a bow to the tough economic times, is shooting for only $6 million in initial funding.

The trouble is that investing in companies that are operating on an idea—and little else—is a very risky business. Culliton figures that 60 percent to 70 percent of the money invested in these fledgling firms will be lost, and that doesn’t always sit well with cautious bureaucrats charged with handling taxpayer money.

The potential reward, however, is when one of those firms survives those tough times and finally starts to grow. “We have to be willing to take the risk that we may lose this money,” he says.

Otherwise, those really good ideas could end up making money—and creating jobs—for somebody else far, far away.