Hey New York State! Quit using taxpayers’ money to pick winners!
You’ve likely seen the spray of government-issued (press) releases throughout the last several months building up to the 4th Annual 43North Finals.
43North is a business venture competition in Buffalo, N.Y. Every year the competition awards $5 MILLION in capital – including a grand prize of $1 MILLION – to startups from around the world. According to their website, “No other startup competition awards more cash.”
In exchange for your money, 43North takes a 5% equity stake in each of the winning companies, regardless of cash award size. Read the fine print. In addition to the $1 million grand prize, equity investments to the winners include one award of $650,000, one award of $550,000, and five awards of $500,000. Since launching in 2014, the state has spent over $20 million on 43North startup investments.
43North was launched by the Governor Cuomo administration as part of the Buffalo Billion initiative to help drive Buffalo’s resurgence by showcasing the opportunity and resources available in Western New York, and attracting entrepreneurs and businesses from across the globe to grow Buffalo’s economy.
The competition is funded by grants from Empire State Development and the New York Power Authority. Winners also receive access to other business incentive programs such as START-UP NY, which offers new and expanding businesses the opportunity to operate tax-free for 10 years.
This year, judges for the state-sponsored 43North competition selected Canadian-based startup, SomaDetect, to benefit from a million dollar taxpayer funded windfall. SomaDetect is an agricultural technology company that provides dairy farmers with key milk quality indicators.
Competition rules state that SomaDetect, and the other 8 winners, must agree to move their companies to Buffalo for a minimum of 12 months, beginning in January 2018. In addition to Canada, the 2017 winners are currently located in Atlanta, California and New York City.
Hopefully this government-sponsored bet, using New Yorkers’ hard earned tax dollars, won’t end a year from now like previous 43North “investments” that have taken the money and run after spending the year-long “residency” required through this ill conceived game.
“Most of the companies that have come to Buffalo after winning in the first two years of the competition have since left: of the 14 out-of-town winners, 11 no longer have any employees in Western New York.”
According to Keith’s report, a handful of these companies said they liked Buffalo, and appreciated 43North’s help ($), but it wasn’t enough to make them stay.
“With 11 of 14 out of region competition winners leaving as soon as their one year residency requirement expires, how can we keep claiming this is a good use of taxpayer dollars to create jobs? Government should stay out of the business of picking winners and losers – let private capital shoulder that risk,” said Martin Babinec, UJP Founder.
The report continued to reveal that of the $9.55 million paid out in prize money in the first two years of the 43North competition, $4 million has gone to companies that no longer have any employees in the Buffalo area, and most of the 10 winning companies that currently employ people in Western New York were already there before they won.
Hey New York State! Quit using taxpayers’ money to pick winners! Let private sector investment drive Upstate New York’s economic development. It’s smarter. It’s more effective. It lasts longer!
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