Business First: ECIDA Restarts Venture Capital Fund
by Jim Fink
July 17, 2014
by Jim Fink
The Erie County Industrial Development Agency is poised to reactivate a dormant venture capital fund and, the agency hopes to use the pool of 43North applicants as a base for reviving the fund.
Rebranded as the Bridge Capital Fund, the ECIDA will be offering a $1 million pool in venture capital dollars to emerging companies looking for bridge or gap financing necessary to jump start their business.
Offering venture capital dollars is not a new concept for the agency, which started a venture capital fund in 1996 with a $9 million investment. Thanks to dollars generated from investing in companies like West Seneca's Gemcor and Buffalo-based Synacor Inc., that pool grew to $20 million. Between 1996 and 2008, the ECIDA offered venture capital support to 34 different companies or projects. However, it has not offered any venture capital dollars since 2008.
"We are trying to bridge that (financial) gap," said Steve Weathers, Erie County IDA executive director.
That is about to change.
A combination of factors, including a push from Erie County Executive Mark Poloncarz, to again use the agency's resources to assist companies and the desire to offer more services helped drive the decision to bring back the fund.
Also looming was the possibility of aiding to those companies who took part in the 43North and LaunchNY campaigns. In 43North, 11 companies will each receive some venture capital allocations with the top firm receiving $1 million. The companies have to start up an operation in the Buffalo Niagara region. The 43North short list, released earlier this week, is down to 113 companies from more than 6,000.
Weathers said he hopes to use the fund to help companies or ventures based in the life sciences, advanced manufacturing and new technology fields, but others will not be excluded.
"In that regard 43North is a perfect pipeline for us," Weathers said.
One of the advantages of the 43North competition is that the contest's review committee will have already done a lot of the due diligence on the projects and companies. The Bridge Capital Fund has a 17-member advisory committee that will vet all applications. The full ECIDA board will vote on any venture capital allocation, regardless of the amount being sought.
"When this comes to us, it will not be someone's idea written down on a napkin," Weathers said. "It will be fleshed out."
Erie County Legislator Edward Rath III said tapping into the 43North pipeline makes perfect sense. Rath pointed out there will be at least 102 companies looking for venture capital dollars just off of that competition. The 43North winning applicants will be announced in late October.
"These are companies that are already on a pathway towards being viable," Rath said. "The 43North people have helped set the table for us."
Poloncarz said while the fund will offer key bridge financing, it is only part of the incentive equation.
"It is not the 'be-all' or 'end-all'," Poloncarz said. "This should be looked as another tool in our toolbox."