Start-ups, investors mingle
High-tech ideas meet potential funding
Erie County Executive Chris Collins wasn’t too far off the mark Thursday when he suggested organizers of the Explore Buffalo Niagara Investor and Entrepreneur High- Tech Forum take a Six Sigma approach to maximizing the event’s success.
“Next time, people who have money, the investors, should have green name tags, people who are burning through money, the entrepreneurs, should have red name tags and everyone else can have white name tags so people know who to ignore,” he joked.
Money was on the minds of most at the Albright-Knox Art Gallery as local high-tech start-up entrepreneurs seized the opportunity to network with those interested in investing in them.
The well-attended event focused on the growth potential of Western New York’s high-tech industries and how to successfully take innovative ideas out of the laboratory and into the marketplace through every stage of commercial development. It consisted of a daylong series of start-up company presentations, networking opportunities and a panel discussion among investment industry experts.
New York State Comptroller Thomas DiNapoli also stopped by to publicize $528 million earmarked for investment in New York State companies from the New York State Common Retirement Fund through its In-State Private Equity Investment Program.
More immediately, though, the event sought to further hone research entrepreneurs’ ability to navigate the business end of securing capital funding.
“We need to see how the pipeline of investment works. It‘s something that has not been clear,” said Marnie LaVigne, director of business development for the New York State Center of Excellence in Bioinformatics & Life Sciences at the University at Buffalo. “This is a big step. Buffalo has not had well defined early-stage funding mechanisms.”
To that end, entrepreneurs heard firsthand what goes into securing start-up capital, including finding the investor appropriately matched to an entrepreneur’s stage of development and niche industry.
“When you’re looking for venture capital, the trick is to find a fund that has a common interest in what you’re proposing,” said Gary
P. Hull, a partner at Summer Street Capital Partners and one of the investment managers in attendance.
That is why start-up development relies so heavily on network-
ing and referrals, experts said. Often that can involve a long process of elimination.
“Usually that doesn’t necessarily mean you go to one investor and that’s your guy,” Hull said. “Someone might come to us and if they’re a not fit we can say, ‘Why don’t you try so and so?’”
And though so-called “angel investors” are seen as a crucial source of funding, professional investment firms, such as the professional firms tapped and funded by the comptroller’s office to manage the retirement fund’s money, may offer equally important credibility and mentoring expertise.
“It’s not just about going after the most easy to access funds. It’s also about gaining credibility, sharing contacts, getting advice,” said Jennifer Chalmers Balbach, a partner at Summer Street Capital Partners, during the panel discussion. “[Professional firms] can give the credibility you need to get to the next level of investment.”
Also important is contact with “serial entrepreneurs,” those who have experience repeatedly developing successful businesses. That’s something that hasn’t always been as readily available in Buffalo as elsewhere.
“There is a lack of serial entrepreneurs, people who have gone through the process several times, who can act as mentors and help to leverage the experiences of the past,” said Kevin
J. Phelps, general partner at Trillium Group, a Rochesterbased private equity firm, during the panel.
But one expert at Thursday’s panel said the Buffalo Niagara region, with its booming medical research corridor, had completed the lion’s share of work simply by bringing developing viable ideas and bringing them to the table.
“You have a real competency in distinct areas. When you mobilize breakthrough ideas, venture capital will show up,” said Shervin Ghaemmaghami, a senior associate at Polaris Venture Partners in Massachusettes.
In an effort to nudge that capital into showing up a bit sooner, the forum arranged blocks of time for start-up companies to pitch their ideas directly to investors.
Select high tech companies in life sciences, energy, information technology and high-tech manufacturing were given 10 minutes to present their companies’ accomplishments, needs and potential to the auditorium audience. Other companies were given one minute to present rapid-fire pitches to investors, cutting right to the quick.
NanoAxis pleaded its case for $1 million to $3 million to further its work with nanotechnology and quantum dots. Advanced Cancer Theragnostics is looking for $800,000 to help grow sales. Balan Biomedical, a company that develops software to compile and analyze medical information, would like $1 million to advance its Web portal capabilities.
Roughly 100 people in attendance Thursday were entrepreneurs looking to secure capital. Another 100 were local and out-of- town investors looking for innovative ideas destined to turn a profit, such as a last-minute attendee from New York City’s Brooks Houghton & Co. Investment Banking.
A recent study from seed-stage venture capital fund Excell Partners said New York State does a great job of funding innovative research, but drops the ball when it comes to funding the start-up companies that can take those ideas into profitability. That causes the state to miss out on valuable economic development, job growth and revenue production it said.
“Whether through life sciences, information technology, clean technology, or high-tech manufacturing, we all share the common interest of growing our economy,” said LaVigne. “To do that, you need three components: technology, talent and capital. That’s what this event is all about.”
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