The Buffalo News
Western New York won, again, in the 43North business plan competition.
Well, actually ACV Auctions, based in the Z-80 Labs incubator on Ellicott Street, won the $1 million grand prize.
But Western New York continues to come up a big winner as the contest generates international buzz. The competition came to a close last week in a “Shark Tank”-like finale at Shea’s Performing Arts Center that was a marketing bonanza.
In its second year, the contest drew more than 11,000 applications from 117 countries and all 50 states. Eleven teams reached the finals, where the judges awarded four $250,000 prizes and six $500,000 prizes along with the million for ACV Auctions.
The 11 finalists at Shea’s had the luxury of knowing that they had won at least a quarter-million dollars to move their business plan along. But they got more than money. The 11 get free incubator space in Buffalo for a year, advice from mentors in related fields and access to other incentive programs such as the Start-Up NY program of tax-free zones. In return, the companies must stay in Buffalo for the year and the contest gets a 5 percent ownership in each business. The stake means the area will benefit even if companies decide to leave after the year of residency.
The prize money represents a substantial boost for start-ups competing for venture capital. ACV Auctions was launched 14 months ago with a novel idea. The company created a smartphone app that allows car dealers who want to sell unwanted vehicles to do so in 20-minute online auctions, as opposed to going through conventional auctions that are more often held weekly. Brilliant idea, really. Want to sell that used car, and quickly? Now there’s an app for that. Two of the six 43North judges, both hedge fund managers, have agreed to invest separately and to mentor the ACV Auctions team.
Other local companies impressed the judges. The biotechnology firm Cytocybernetics won $500,000 and Buffalo-based sports training data tracker CoachMePlus won $250,000.
There are no guarantees for these companies. The Wall Street Journal cited a rule of thumb that only 10 to 20 percent of all start-ups produce substantial returns. That’s the nature of capitalism – it takes more than a good idea to succeed. With funding, solid mentoring and other assistance, 43North is raising the odds for this year’s winners.
But there’s more than that going on here. The contest is marketing gold to the entire region, and there’s the possibility that some of these companies may stay and prosper, becoming another piece of the puzzle in rebuilding Western New York.