Investors Come Looking for Deals in Upstate/Western New York

BUFFALO, N.Y. -- Downstate and out-of-town investors are coming to Buffalo in May looking for deals and new ideas. The 2012 Venture Forum is attracting new attention from investment firms from New York City, Ohio, California, Maryland, Illinois and Pennsylvania.

The 2012 Venture Forum is a collaboration between the Bright Forum -- Buffalo Niagara's premier event for connecting investors and entrepreneurs -- and the Center for Economic Growth's SmartStart UNYTECH Venture Forum.

For the first time, the two events, typically at opposite ends of the New York State Thruway, have joined forces to capitalize on their past success. The annual forums have introduced more than 255 companies to the venture capital community with more than 60 companies raising over $500 million in equity financing, including $72 million directly attributable to companies' participation over the past 11 years.

One newcomer this year, Managing Director Richard Stuebi from Early Stage Partners in Cleveland, Ohio, said, "The ground for venture entrepreneurship has the inherent conditions to be fertile in upstate and Western New York; we would like to better get to know the opportunities."

Stuebi said his firm has to date been regionally focused on Ohio and Michigan, but that they are considering expanding into what he thinks may be an underserved market as they begin planning for their third fund.

"The Buffalo, Rochester, Syracuse markets, stretching to include Cornell, have a history of innovation, given the region's research universities and the legacy of such pioneering corporations as Kodak and Xerox." Stuebi added: "We want to make contacts, look for potential co-investors in our portfolio companies, and build deal flow for future funds."

Early Stage Partners is a venture capital firm formed in 2001 with the belief that the Midwest would create a significant number of early-stage technology companies that would provide attractive investment opportunities.

Another first-time attendee this year, Thomas Parkinson, a partner with Hopewell Ventures in Chicago, Ill., said a Venture Forum email got him thinking of the good networking opportunities for his company's new fund.

"I could consider the event a success if we get to meet the leaders in the investment community and those persons active in supporting upstate/Western New York's entrepreneurial community," Parkinson said.

Hopewell provides equity capital and strategic expertise to high-growth businesses, primarily in the Midwest, with a current focus on central and northern Appalachia, including parts of New York State. Parkinson said the growing investment in shale as an energy resource piqued the firm's interest in attending the Venture Forum and learning more about the entrepreneurial activity in this region.

Managing Partner Timothy O'Neill of Golden Seeds in New York City feels it's incumbent on the city-located investment firms to reach beyond their urban boundaries.

"Good ideas are not the sole purview of major metropolitan areas," O'Neill commented. "While it's easy to find many investment opportunities in the city, we need to push ourselves geographically, and it's exciting to hear about what's happening elsewhere in the state."

A newcomer to the Venture Forum, O'Neill said it was a good place to start connecting with upstate and Western New York entrepreneurs and investors.

Golden Seeds is one of six companies that received a grant through the federally funded Innovate NY Fund, which will be addressed in opening remarks at the forum by Steven Cohen, Empire State Development's (ESD) deputy commissioner and senior vice president for community economic development. Distributed through ESD, Golden Seeds received $4 million to invest in general technology, life science, or consumer product focused seed stage businesses located across the state.

Golden Seeds now has two seed/early stage venture funds and the fourth largest angel investor network in the U.S. It invests in young companies with women in senior management positions who also have significant equity positions in the companies.

Former Western New Yorker and Managing Partner Thomas Matthews Neale of Patriot Capital in Baltimore, Md., whose firm has invested across the country, is optimistic about the value-add manufacturing and service companies in Western New York.

"We want to invest in New York and are looking for opportunities in former heavy manufacturing industrial cities such as Buffalo with its very capable and highly skilled workforce," said Neale.

Patriot Capital is a mezzanine funder, working with other private equity firms interested in investing in middle-market companies in the 30-80 employee range. Neale says Patriot Capital looks for companies with good management and a minimum of $3 million in annual cash flow that want capital to expand their businesses, make acquisitions or recapitalize.

The 2012 Venture Forum (May 16-17) features a series of pitch sessions where entrepreneurs present ideas to investors. Primary sponsors include the University at Buffalo's New York State Center of Excellence in Bioinformatics and Life Sciences, The Center for Economic Growth, and Superior Group, a global workforce and business solutions provider.

Marnie LaVigne, associate vice president for economic development at UB, welcomes the alternative perspectives that new investors bring to the forum and is hopeful that it's the beginning of many fruitful relationships.

"The Venture Forum is all about accelerating the growth of high-tech companies in upstate New York by facilitating deal-making," she said. She continued, "Events like these are vitally important because Kaufmann Foundation studies have shown that new net job growth comes from young companies, so innovation and entrepreneurship have to be a centerpiece of transforming our region's economy."

To register for this year's Forum or to learn more, visit www.brightbuffaloniagara.com.