Buffalo, N.Y. isn't an obvious location for a start-up firm, a perception the American border city is trying to change by hosting a worldwide business competition with individual prizes valued at up to $1-million (U.S.).
The 43North contest also includes free incubator space for a year and mentorship for budding entrepreneurs.
It's open to students, startups and venture capitalists from around the world, and applications are coming in from as far away as Israel, India and China. Heavy promotion is also underway in nearby southwestern Ontario cities such as Toronto and the Kitchener-Waterloo area, where a number of start-up firms are considering applying .
"It's an opportunity to change the perceptions of this part of the world that people don't necessarily think about for innovation and entrepreneurship," says venture capitalist and 43North executive director Andrew Pulkrabek. (The contest is named latitudinal line that runs through Western New York).
Prize packages valued at $5-million will be handed out to 11 winners, making it one of the largest business plan competitions in the world. The top cash prize is $1-million. There are also six $500,000 prizes and four valued at $250,000 each.
It's a savvy move for the city with a population of about 261,000 (1.2 million including the surrounding metro population) and which Forbes recently named the most affordable city in America.
Buffalo is sometimes called the "City of Light" due in part to its huge hydroelectric power capacity made possible by nearby Niagara Falls. Today the city's economy is driven by government, education and health care sectors, but its technology sector is growing as the city tries to boost its unemployment rate, now sitting a just over 8 per cent.
The city has announced $4.3-billion in new economic development activity since 2012, which it says is a record.
43North is being funded by the New York Power Authority, which is using the funds from excess power reserves. It's part of the so-called Buffalo Billion initiative, where money is being spent to help drive economic development throughout Buffalo and Western New York.
"The winners will be coming to Buffalo at an exciting time of growth and economic revival," stated Satish Tripathi, western New York regional economic development council co-chair and president of the University at Buffalo when the contest was announced last month. "This is a tremendous opportunity for the best and brightest startup minds to be a part of the renaissance."
But getting people to move to Buffalo may be easier said than done.
Despite the lure of big money, mentorship and for many startups, a larger U.S. market, companies will need consider whether moving to Buffalo is the right strategy for their business.
Prodigygame.com, a Burlington, Ont.-based company that tests kids' math skills, is weighing the pros and cons of an application.
Business development manager Chadwick Poon says the company needs to consider the location of its customer base, which is largely students in Ontario, as well as the potential of losing staff that may not want to relocate south of the border.
"These are hard things to do," says Mr. Poon, who is a student at Wilfred Laurier University in Kitchener.
On the other hand, Mr. Poon says there may be an entire new customer base in the much-larger Buffalo market that the company can tap into. Winning the contest could also be a huge marketing gain.
"That's incredible PR that you can't really buy with money. That's a huge pro," he says.
Having access to mentors that can help oversee the direction of the business is also attractive. And, so of course is the prize money.
Desmond Choi, co-founder of Kitchener-based Sparkgig.com, a website that helps event planners book performers such as magicians or piano players, says the company plans to apply to the contest to get input on the new business launched last summer.
"As an early-stage startup, we want to get our name out there and get as much feedback as possible," says Mr. Choi, a student at the University of Waterloo.
Even if they don't win, just getting in front of the judges will be invaluable, he says. "Even though our product isn't perfect, we think it's important."
Moving to Buffalo isn't a concern for Sparkgig.com, which is looking to expand into markets outside the Toronto area.
"Even though most of our business right now is the Toronto market, we do see potential entering into the States. The competition will at least give us good guidance and get a sense of what's out there."
In fact, 43North is one of handful competitions the company is entering in the next few weeks, including others in Toronto, Waterloo, Halifax, Phoenix and Nassau, Bahamas.
The only negative Mr. Choi sees is the time the competitions take away from product development. Still, it's considered a worthwhile effort for his team to not only spread the word about company, but also learn from other entrepreneurs.
"Even though we might not win, at least we can win the audience and network among them," he says.
43North's Mr. Pulkrabek says they've received more than 250 applications so far and expect to receive a minimum of 1,000 before the May 31 deadline.
About 50 to 70 applications will be selected for the second round of judging, where applicants will need to pitch more detail business plans in an online presentation in mid-September. From there, 11 winners will be selected for a third round of judging which will take place in person in Buffalo at the end of October. That final round will determine who will win the top prize of $1-million as well as the secondary awards.
Winners are expected to be announced in January, which Mr. Pulkrabek says gives 43North time to handle immigration for out-of-country winners and other legal and regulatory matters that comes with setting up a new business in the city.