The following is a repost of an article from Buffalo Business First highlighting 43North awarding follow-on funding to three of our portfolio companies. We’ve also included a recap video for a behind-the-scenes look at our follow-on fund selection process.
43North has reinvested in three companies that previously won awards in its namesake competition.
Kangarootime, CleanFiber and Strayos each received a new $300,000 investment from the state-backed nonprofit. 43North has been hosting a business competition since 2014, offering cash awards to startups in return for 5% of their companies.
The goal has been to help boost Buffalo’s startup economy, and several previous winners had big years in 2020. That includes ACV Auctions, which went public in March, and Squire Technologies, which raised nearly $100 million in venture capital last year.
But those aren’t the only 43North firms to get excited about, President Colleen Heidinger said. Through its investment committee, 43North accepted pitches from its entire portfolio for the new funding tranche.
“These are strong contenders for success in this community, and the reason they floated to the top was their commitment to Buffalo,” Heidinger said.
43North did not hold a competition last year but is gearing up to host one this year, Heidinger said.
Scott Wayman moved his startup from Los Angeles to Buffalo after winning a $500,000 award in the 2017 competition. Kangarootime’s software platform helps daycare and preschool facilities run their businesses.
The pandemic hit Kangarootime’s customers hard, but also emphasized the firm’s value proposition, Wayman said. Tech tools to support operations and planning were suddenly more than just a convenience.
The company’s employees also adopted an attitude of relentless support, from webinars and content to one-on-one consultation, Wayman said.
Kangarootime’s headcount has tripled since last March, and it now has about 20 employees in Buffalo. Revenue was up 100% in 2020 compared to the previous year.
And with a next-generation platform being unveiled – internally it’s been dubbed “K2” – Wayman said his firm’s growth will continue.
“We feel like growing in Buffalo is extremely capital efficient, and we’ve been delighted by the talent that we’ve found here at all levels,” he said. “I think our headcount in Buffalo will be about 30 employees by the end of the year, and next year we should see an exponential factor of growth.”
CleanFiber CEO Jon Strimling moved his business to Buffalo after winning $500,000 in the 2016 version of 43North.
Since that time, he has turned the theoretical promise of his company into a real-world factory that can barely keep up with demand. CleanFiber turns recycled cardboard into building insulation.
The firm now has nearly 40 employees at its 60,000-square-foot factory in Blasdell.
Strimling said customers, investors and broader financial markets are placing a higher value on sustainable technologies after the election of President Biden. That will serve CleanFiber well as it sees expansion ahead.
“We have a tremendous backlog, and we are scaling up production to meet demand,” Strimling said. “We are going to be sold out for the foreseeable future, and we think we have enough demand to fill up the entire plant.”
In addition to the 43North money, Strimling said, the company recently closed on a $5.5 million extension of its Series A round from private investors.
Strayos won the $1 million grand prize in the 2019 competition and moved its business to Buffalo shortly after.
Led by CEO Ravi Sahu, the firm offers an artificial intelligence platform that maps underlying geological conditions. The pandemic slowed the business of on-site sales at mines and quarries, and Strahu said that while virtual sales remain a focus, getting back to traditional field sales will help fuel a major expansion this year and next.
With seven employees in Buffalo and several open positions here, Sahu sees a steady pathway up for his company.
“We will continue to expand our team in Buffalo not only this year but in future years as well,” he said. “That includes hiring on the engineering and product side but also on the sales side as well to help us accelerate the opportunities we have developed.”