43North’s final pitch is over. The biggest return on New York’s startup bet now sits in a foundation

By Staff Reporter

BUFFALO — Eight startups took the stage at Shea’s Performing Arts Center on Oct. 8 for what 43North billed as “The Final Finals.” Five of them walked off with $1 million investments. Only one, Ree Dolnick’s JECA Energy Bars, is from Buffalo.

The others came from Oregon (Airbuild), Arlington, Texas (Leansite), Rochester (Playground) and New York City (Valene Health), according to 43North. Under the competition’s rules, winners move to Buffalo for a year. After that, staying is up to them.

It was the last time the state-founded competition will hand out its $5 million. Gov. Kathy Hochul announced in May that the accelerator will wrap up at the end of 2027. The work moves to the 43North Foundation, which says it has a $100 million, decade-long plan for Buffalo’s startup scene.

That handoff leaves a question that has followed 43North since 2014. What did New York taxpayers get for their money? And now that the bet’s biggest win, ACV Auctions, has paid off, who decides how that money gets spent?

What the state says it bought

The governor’s office calls 43North a model. “43North represents the best of what a public-private partnership can achieve,” Ms. Hochul said in May. “Over the past decade, we’ve helped transform Buffalo into a destination for innovation, attracting world-class entrepreneurs and creating new opportunities across Western New York.”

43North’s own scorecard says it has invested $55 million in 79 companies since 2014. It says those companies have raised more than $1 billion in follow-on funding and created more than 3,000 jobs around the world, about 1,000 of them in Western New York. It also says 75% of the companies it backed are still in business, 15% have been acquired, and 70% of the active ones keep a presence in Buffalo.

Run the math on those percentages and roughly 59 of the 79 companies are still operating, and about 41 of them have some footprint in Buffalo. “Presence” isn’t defined, and the job counts are self-reported. The state hasn’t published an independent check of them.

Back in 2019, New York said the competition was “supported by a total of $55 million from New York State, including funding from Empire State Development and the New York Power Authority,” in a release 43North still posts. At that point the program counted 44 companies and more than 400 Western New York jobs. Seven more competitions followed.

What the tax filings show

The nonprofit that runs the competition, 43North BPC Inc., files a federal Form 990 every year. Figures from those returns, compiled by ProPublica’s Nonprofit Explorer, show $85.4 million in contributions and grants from 2015 through 2023. That’s the program’s main source of money, though the summary data don’t separate state dollars from private sponsorships. Over the same nine years it reported about $129 million in expenses.

Most years look like a $5 million prize fund plus staff and programs: between $6.4 million and $9.9 million in contributions, with spending close behind. Two years break the pattern:

• 2020: contributions jumped to $28.8 million and expenses to $27.5 million.
• 2021: the year ACV went public, the competition reported $3 million in revenue and $48.7 million in expenses.

Pay rose too. Compensation for current officers, directors and key employees went from $154,263 in 2015 to $601,319 in 2023. Other salaries and wages that year came to $735,886. At the end of 2023 the organization reported $12.5 million in assets, $3.4 million in liabilities and a $1.25 million unsecured note.

The 2024 return has been filed, but its figures haven’t been extracted into ProPublica’s summary data yet. The Buffalo Chronicle has asked 43North to explain the 2020 and 2021 swings.

The ACV windfall moved to a foundation

43North takes an equity stake in every company it funds. ACV Auctions won the $1 million grand prize in 2015. When ACV filed to go public in 2021, The Buffalo News reported that a newly formed 43North Foundation held about 3 million ACV shares and planned to sell 500,000 of them in the offering.

The foundation’s chairman, William Maggio, explained the setup at the time. “As a result of what we believe to be one of the region’s most successful economic development initiatives brought forth in collaboration with Empire State Development, we’ve established a foundation to ensure the legacy of 43North carries on for decades to come,” he said.

He described how the money would be handled. “In preparation of a liquidity event for any of the 43North portfolio companies, 43North’s investment committee has formed a foundation where any and all earnings will be retained and made available for use per investment committee determinations and direction,” Mr. Maggio said.

The foundation, 43North Foundation Inc., got its tax exemption in December 2020. Its returns show $56.5 million in revenue in 2021, including $44.1 million in contributions and $12 million from asset sales. The same year, the state-backed competition reported its $48.7 million in expenses. The filings don’t say outright that the ACV shares were moved from one group to the other. But the size and timing of the two figures line up, and Mr. Maggio had said the foundation was formed to hold portfolio earnings.

The foundation’s net assets were $67.4 million at the end of 2021. They fell to $47.2 million in 2022, then recovered to $57.4 million in 2023 and $61.1 million in 2024. Spending has been light so far:

• 2021: $63,777
• 2022: $155,949
• 2023: $1.06 million
• 2024: $258,205

Its only paid officer listed in 2024 was the treasurer, at $20,000. The board includes Mr. Maggio, Jordan Levy, Eric Reich, Ron Schreiber, Allen Pete Grum and Sharon Randaccio.

That’s the accountability gap. The original equity came from a competition the state largely paid for, but the gains now belong to a nonprofit whose board sets its own priorities. The foundation says it has made “a $100 million commitment to Buffalo” over 10 years. At the end of 2024, its own books showed about $61 million.

Where the money is supposed to go

The foundation has four programs:

• Radial Ventures: an AI-led venture studio that builds startups from scratch.
• TechBuffalo: training and keeping startup-ready workers.
• Series B: storytelling and publicity aimed at founders and investors.
• Corporate connections: an ambassador network linking startups with established Buffalo companies.

Colleen Heidinger, 43North’s president, has called the shift a “graduation.” In the governor’s release she said, “Since our inception in 2014, New York State has been our number one supporter — championing a bold vision for Buffalo’s future and standing alongside us every step of the way.”

Ms. Heidinger told Buffalo Toronto Public Media in May that the next phase will be judged by whether companies stay. Asked what keeps founders here, she said, “What I hear most often is the people we have.”

Mr. Levy, 43North’s founding chairman, put it in bigger terms on the competition’s farewell page. “When 43North was started, the goal was simple but ambitious: attract, finance and grow world-class companies in Buffalo,” he said. “Today, it’s done exactly that. But more importantly, it has fundamentally changed the belief in what’s possible here.”

Hope Knight, president and CEO of Empire State Development, said the state’s “intentional investments through 43North have completely reshaped Buffalo’s economic landscape.” She said the agency “remains deeply committed to sustaining this momentum.” Neither ESD nor the governor’s office has said whether the state will put money into the foundation’s programs, or what reporting it would expect if it does.

The retention problem was flagged early

The weak spot in the one-year relocation rule has been on the record for almost a decade. In 2017, Investigative Post found that 11 of the 14 out-of-town winners from the competition’s first two years no longer had any employees in Western New York. It also found that $4 million of the $9.55 million in prize money from those years had gone to companies with no local workers.

James Allen, then the longtime executive director of the Amherst Industrial Development Agency, told the outlet the relocation requirement was a “gamble that, unfortunately, hasn’t paid off.”

“If we can get them to stay for three to five years, we can keep them. But if it’s only a year commitment, then, chances are, we’re going to lose them,” Mr. Allen said.

John Gavigan, then 43North’s executive director, defended the program as a “marketing juggernaut” for the city. “In North America and around the globe, people are beginning to believe that Buffalo is a place that you can start and grow a business and have a successful life,” he said. “How do you put a pricetag on that?”

Investigative Post also reported that two other state startup-investment programs required companies to stay in New York for three and five years. 43North kept the one-year rule. Its leaders said a longer commitment would scare off the best applicants.

The program’s later numbers are better than those early cohorts. Taking 43North’s figures at face value, about 41 of 79 portfolio companies keep a Buffalo presence. But Investigative Post’s 2017 review also found that most of the winners still employing people here were already in Western New York before they won. ACV itself was a Buffalo startup. That supports the critics’ point that homegrown companies are the ones that stick.

The region’s scoreboard

Twelve years in, the broader numbers for local entrepreneurship are sobering. The Buffalo Niagara Partnership’s new Prosperity Report compares the region with 12 peer metros, and Buffalo Niagara comes out at or near the bottom on startup measures:

• It was the only one of the 13 to lose business establishments from 2020 to 2025, down 1.6%.
• It ranked last in new business applications, at 9.2 per 1,000 residents. That’s less than half the rate in Salt Lake City.
• It ranked 11th in patents and 10th in venture capital per person, The Buffalo News reported.

“Applications are an indicator of potential business creation,” said Grant Loomis, the Partnership’s president and CEO. “They do not all become operating firms. Still, that (ranking) suggests we need a much stronger pathway into entrepreneurship.”

The report itself suggests the region’s problem is less about new innovation assets than about putting existing ones to work. In other words, Buffalo has the research. It isn’t turning it into companies. That’s the job the foundation now says it will take on.

Who is accountable, and what could fix it

Empire State Development paid for and oversaw 43North, and as the competition winds down it remains the agency responsible for showing what the public got. A few steps would put the next decade on firmer footing:

• An independent count. ESD, or an audit by the state comptroller, could check 43North’s job and retention claims company by company. That would show how many of the roughly 1,000 Western New York jobs are at companies that were already local before they won.
• Public reporting from the foundation. The foundation’s assets grew out of a state-funded stake. It could publish what it grants and invests each year, with the same job and retention measures the state used.
• Longer commitments. If the state funds Radial Ventures or similar programs, it could require multi-year Buffalo residency or clawbacks, like the other state programs Investigative Post cited.
• Measurable targets. The Partnership’s benchmarks, like business applications and establishment counts, give the region a scoreboard. Any new state innovation money could be tied to moving them.

The Buffalo Chronicle has asked 43North, the 43North Foundation and Empire State Development about the tax filings, the foundation’s spending plans and the state’s role after 2027. This story will be updated with their answers.

Featured image: Seneca One Tower, home of 43North, in 2023. Photo by Quintin Soloviev via Wikimedia Commons, CC BY-SA 4.0, cropped.