Start-ups chosen to participate in the $5 million 43North Business Plan Competition will get free office space, free mentoring services, up to a million dollars in cash and access to investors in exchange for moving to Buffalo, New York.
Companies that set up shop in Buffalo will get a 10-year tax holiday, Andrew J. Pulkrabek, executive director of 43North, said. “Start-ups that are chosen for the program will not have to pay state income tax for 10 years, and neither will their employees,” he explained. “As far as I know, we are the only state-sponsored incubator program offering this.”
Give a start-up enough money and they will be willing to relocate almost anywhere, even Buffalo. Those who think of Buffalo as a rusty, broken-down, old-industry geriatric town, though, are way behind the times, said Pulkrabek. “Buffalo has completely reinvented itself, and today has a large number of tech companies, like education tech firm Campus Labs and the Roswell Park Cancer Institute, which has spun off 13 biotech firms. We’re part of the greater Toronto metropolitan area, a 45-minute drive from the city, and a 45-minute plane ride from New York City.”
Word of the benefits of Buffalo has not spread, which lead 43North to start a competition to get start-ups from around the world to build a presence in the city. 43North is a non-profit company, sponsored by the State of New York, and the funding for it comes from a program called Buffalo Billion, which was started by Governor Andrew Cuomo to revive business in western New York State.
Eleven companies will be selected for the program, with the top winner getting a million dollars, and the others splitting the balance of the four million. Pulkrabek said that 43North is open to almost any tech idea, including information technology, biotech and advanced manufacturing. Companies can be early stage, with just an idea, or more mature, with a product or service already on the market. “Selection for the program will depend on how good the judges think the idea, product or service is,” said Pulkrabek. “We are going to look at their ideas, their business plan and their chances for success.”
There are two requirements, Pulkrabek said. “Companies accepted into the program must commit to opening up a facility in Buffalo for at least a year, and they have to sign over 5 percent of their company’s equity to 43North,” which will become a silent partner with the start-up. “Our hope is that after a year in Buffalo, companies will want to stay.”
Buffalo was named one of the ten most affordable cities in the United States last month by Forbes, and it’s got plenty of cultural, sports and outdoor activities. Niagara Falls is 20 minutes away from the city. If you like snow, Buffalo is the place to be: the AccuWeather website in March named Buffalo as one of America’s three snowiest cities. Forbes in 2012 named the city as one of the most dangerous in America, but by 2013 it had dropped off the list. In any event, Pulkrabek, a Minnesota native, is very happy in Buffalo. “It’s very livable,” he said. “My commute is about ten minutes, and a nice house costs about $100,000 a year.”
That’s good enough for the 6,000 or so companies that are in the application process to join the program before the May 31 deadline. “This is probably the biggest and most subscribed tech competition ever,” said Pulkrabek. “After submissions are closed, the judges will choose about 100 finalists who will go on to the semifinals, and they will present their technology to judges in a live webinar in June.” After that, the judges will choose the 11 finalists who will be brought to Buffalo to present their technology in person.
Judges will award the top company the $1 million in cash, as opposed to many other similar competitions, which provide services “valued at” as their prizes. Six runners-up get $500,000 each, with the other four getting $250,000. “Actually, I would consider anyone who gets into the semifinals to be a big winner, regardless of whether or not they get any money,” said Pulkrabek. “The semifinals are going to be a major web event, so the companies will all get a lot of publicity, getting the word out to millions of people about what they do.”
Although the odds sound steep, Pulkrabek came to Israel this week specifically to encourage Israeli companies to apply. “We’ve had applicants from 70 countries, but the state sent me out to drum up applicants in just two places — Israel and India,” Pulkrabek said. “Israel is especially important to us. We’ve seen the level of innovation and entrepreneurship in this country, and we want some of that in Buffalo. There’s a reason they call this the start-up nation, after all.”
Click below for a video announcing the 43North competition: