The 43North business plan competition, which may have looked like a tiny tack-on to Gov. Andrew Cuomo’s Buffalo Billion initiative, has truly turned into a global contest.
Dangling a $1 million top prize and riding a strong buzz on social media, the 43North contest enters its final week for submitting applications riding a tailwind that already has seen it easily surpass the 1,000 entrant goal that its organizers set back in February.
In fact, the contest landed its 2,000th entry at the beginning of April, and at that point, it was receiving applications at a pace of about 100 per day.
“We’re really pleased with where it’s at,” said Andrew J. Pulkrabek, the competition’s executive director.
43North officials have refused to say how many entries they’ve received since the contest crossed the 2,000 application mark, opting instead to remain silent on the total until the deadline for submitting applications closes May 31.
But Pulkrabek said he’s been pleased with the response the competition has received, both online and at the dozens of events organizers have held across the United States and southern Ontario, as well as in India and Israel.
By late last week, the global scope of the contest was clear. 43North had received entries from all 50 states and 91 different countries, from Andorra to Zimbabwe.
Pulkrabek said that global reach shows not only the appeal of the $5 million in prizes that the competition will provide to 11 winners, but also the power of social media in getting the word out to entrepreneurs across the globe. Organizers have relied heavily on postings on social media sites like Facebook and Twitter to publicize the competition.
Venture capitalist Fred Wilson blogged about the contest, exposing the competition to the tens of thousands of people who follow his postings. Chris Sacca, a Buffalo native who was one of Twitter’s first major financial backers, tweeted about the contest earlier this month.
In all, those social media efforts have exposed the contest to an estimated 8 million people, Pulkrabek said.
Organizers even used Twitter to try to drum up what had proved to be an elusive entry from Vermont.
“VT, you look lonely! Come join the other 49 states that have entered #43North!” the contest’s organizers tweeted May 14.
The next day, The University of Vermont Business School sent out its own tweet about the competition.
And behold, the long-sought entry from Vermont came in shortly afterward.
“We’ve been pushing for a while for all 50 states, and Vermont was the last holdout,” Pulkrabek said. “Now we’ve got Vermont.”
The state will hand out 11 prizes, ranging from a grand prize of $1 million to runner-up prizes of $250,000, to entrepreneurs whom the contest’s judges deem to have the most promising plans for a new business. Early-stage ideas and businesses just getting started qualify.
Winners will receive rent-free space in an incubator site that will be part of the state’s StartUpNY tax-free zone, which means those businesses won’t be subject to most state taxes and employees won’t have to pay state income taxes for 10 years. The winning firms also will be provided access to other resources and mentoring services to help them turn their ideas into viable businesses.
Pulkrabek said the StartUpNY benefits could be a powerful magnet to help convince the winning entrepreneurs to stay in Buffalo after their one-year commitment ends. “StartUpNY is a program that has tremendous value,” he said. “In the long run, StartUpNY could be more valuable to those companies than the prize.”
George Chaumoun, a co-founder of Buffalo-based Internet content provider Synacor Inc., said the contest and the StartUpNY program also are laying the groundwork to create a better environment in the Buffalo Niagara region for encouraging innovation and developing it into viable businesses.
“We’re starting to reach critical mass,” he said.
State officials launched the 43North competition as part of the Buffalo Billion initiative to help spur new business formation in the Buffalo Niagara region. That initiative includes hundreds of millions for a high-tech clean energy manufacturing center, a manufacturing competitiveness institute, a manufacturing training center, a medical innovation hub and a genomic research center, among other investments.
Amid that lineup, the business plan competition seemed like small potatoes. But since it has caught fire, backers believe it could prove a fruitful endeavor. Winners are required to start and operate their businesses in the region for at least a year.
While the 43North competition is aimed at bringing more startup companies to the Buffalo Niagara region, the area isn’t alone in grappling with a decline in new business formation.
Across the country, economists are concerned about what has been a 30-year steady slide in business startups. Over that time, the pace of startups has been cut nearly in half, including a “precipitous drop” that began in 2006, according to researchers at the Brookings Institute.
The number of startups fell below the number of failures after the Great Recession began. By 2009, more companies were failing than being born. The Brookings report that found the decline in new business formation was spread across all states, nearly all metropolitan areas and each sector of the economy.
In the Buffalo Niagara region, an average of 6.3 percent of the businesses were less than a year old during the period between 2009 and 2011, the Brookings researchers found. That’s more than a third lower than 30 years ago, when just under one in every 10 businesses were less than a year old.
Exactly why the number of startups has been shrinking isn’t clear, but economists said shifts in bank lending habits away from small businesses, mounting regulatory burdens in some industries, and the increasing difficulty businesses face in making products and getting them on store shelves all could be contributing to the decline.
And that could be adding to the appeal of the 43North prizes.
The big winner will get the $1 million, but six others will come away with $500,000 and four others will get $250,000. One of the winners will be local. In return, the winners have to move their venture to Buffalo for a year, and handy over a 5 percent stake in the business in exchange for the money.
The first phase of the competition, which ends Friday, requires entrepreneurs to provide a relatively brief summary of their ideas that identifies their potential markets and customers and their visions for the ventures.
A cadre of volunteer judges from a wide range of industry sectors then will spend the next few weeks pouring over the entries. Organizers plan to assign 10 applications to each judge, pegged to their individual area of expertise.
From there, the contest’s organizers plan to narrow the field to a group of 50 to 75 semifinalists that will be evaluated more intensely during a five-day session from Sept. 15 to 20 that will include 10-minute online presentations that will be able to be viewed by the public.
The final stage will take place from Oct. 27 to 31, when the 11 finalists will travel to Buffalo to pitch their businesses to a panel of local judges with 10-minute presentations, followed by 10 minutes of questions from the judges.
“They’ll know they’re going to get an award,” Pulkrabek said. “They will not know what that award will be.”