2016 ANNUAL REPORT The only Venture Development Organization (VDO) serving entrepreneurs across the 27 westernmost counties of Upstate NY for a better economy.
The Principles That Guide Our Work Board of Directors George Chamoun, Chairperson Chief Executive Officer, ACV Auctions Jordan Levy, Vice Chairperson General Partner, SoftBank Capital NY Managing Partner, Seed Capital Partners Co-Managing Partner, Z80 Labs Paul T. Hogan, Director Executive Vice President, The John R. Oishei Foundation Zachary Shulman, Director Managing Partner, Cayuga Venture Fund Director of Entrepreneurship, Cornell University Officers Marnie LaVigne, Ph.D., Secretary President and CEO, Launch NY Michael A. de Freitas, Assistant Secretary Attorney, William C. Moran & Associates George Chamoun, Treasurer Chief Executive Officer, ACV Auctions Dedicated to Early Support to Create Impact Launch NY recognizes that promising seed stage companies face tremendous risks but also serve as a major driver of job and wealth creation that can transform our regional economy. We are uniquely focused on identifying and supporting the region s most innovative entrepreneurs to help them progress through the critical early stages of creating a successful business. Learn & Implement Best Practices Bringing new ways of thinking to our region means continuously interacting with thought leaders from around the globe and seeking out proven success models to tailor to our region. Listen to Entrepreneurs Our ongoing work with entrepreneurs across the region by our team of experienced entrepreneurs inspires us to develop and implement new and highly relevant support programs and resources that encourage startup company success. Promote Diversity Offering equal access to support and funding regardless of gender, race, or socio-economic standing is essential to help transform great ideas into growing businesses that reflect the rich diversity of our region and facilitate every individual s participation in the new economy. Encourage Collaboration & Efficiency Working within the region s entrepreneurial ecosystem, we have embraced our leadership role in planning, funding, and mentoring. By developing relationships and collaborative programs, we help expand the reach, effectiveness, and efficiency of all partners in our powerful resource network. 2016 Launch NY Annual Report LaunchNY.org
Highlights 2016 Major Accomplishments While serving 225 high-growth potential companies with business support, we also marked 2016 with the successful introduction of the Launch NY Seed Fund. The Fund represents the completion of our original business plan to offer proof-of-concept capital, together with pro-bono mentoring, to fill the gap in funding that has held our region back from growing new businesses. I am grateful to our supporters who have recognized the contribution of entrepreneurship to our local economy and embraced their role in supporting Launch NY in meeting the growing demand for our services and funding. With $2,955,460 from supporters, including a $2.5MM award from the Ralph C. Wilson, Jr. Foundation and the only U.S. Department of Commerce Economic Development Administration Seed Fund Support Grant in the Northeast, Launch NY is positioned to accelerate new job and wealth creation through startup businesses like never before. We continue to seek new collaborations in the region, expand connections regionally, nationally, and globally, and share resources to deliver efficient and successful programs that benefit all. It s all part of our long-term effort to build a sustainable entrepreneurial ecosystem to help the most promising entrepreneurs transform our regional economy, while bringing life-enhancing products and services to the market today and tomorrow. Marnie LaVigne, Ph.D. President & CEO, Launch NY MLaVigne@LaunchNY.org Mentored 225 companies that employ 609 people, for a total of 626 companies served and 1,579 employees since 2012. Introduced the Launch NY Seed Fund, processing 32 applications for vital proof-of-concept capital, committing $225,000 to six of Upstate New York s most promising companies. Additional co-investment and follow-on funds brought the total investment dollars for Launch NY Seed Fund portfolio companies to $512,500. Received a $2.5MM grant from the Ralph C. Wilson, Jr. Foundation as the largest single grant award since Launch NY s inception. The funds support a 24-month initiative to ramp up both mentoring programs and seed capital resources in tandem with long-term ecosystem planning. Led Western New York s competitive bid leading to selection as one of 16 U.S. cities for the VilCap Communities program, a follow-up initiative to AOL founder Steve Case s Rise of the Rest tour in Buffalo, also supported by Ewing Marion Kauffman Foundation and the Sorenson Impact Center. Launch NY, in partnership with the University at Buffalo, Invest Buffalo Niagara, and the Western New York Incubator Network (WIN), conducted a four-month life sciences accelerator program for 11 companies that engaged over 100 mentors, yielded two peer-selected, $50K investments from the Launch NY Seed Fund, and grew the region s life sciences industry cluster. Received a $245,460 award for the Mentorship-Driven Seed Fund initiative, in collaboration with CenterState CEO s Tech Garden in Syracuse. As one of eight prestigious national awards from the U.S. Economic Development Administration s Regional Innovation Strategies Seed Fund Support Grant program, this was the only award in the Northeast. Partnered with the leading philanthropic organization in entrepreneurship, the Kauffman Foundation, to conduct the first cross-regional ecosystem assessment on advanced manufacturing entrepreneurs and the overall business support landscape. This project represents the first time Kauffman Foundation funding has been received in Western New York. 1
What Drives Us How can we make a tangible difference in the growth, economy, and future of an entire region? Based on national studies showing the impact of entrepreneurship on local economies, Launch NY was created to address the gaps in our region s support resources, including entrepreneurial experience and risk capital. Since starting operations in 2012, we have been committed to identifying, supporting, and investing in high-growth, high-impact companies the proven engines of growth. As the region s only Venture Development Organization (VDO), we provide startups with vital guidance, connections to expert resources, and the funding needed to get started, survive initial challenges, and achieve ongoing success. We re all about strengthening the ecosystem and entrepreneurial culture throughout Upstate New York to catalyze the creation of jobs and wealth. This is what drives us. Boots on the Ground Entrepreneurs-In-Residence Entrepreneurs-In-Residence (EIRs) are experienced business and industry professionals who coach Launch NY clients oneon-one from their locations throughout our 27-county service area. They are trained to assist entrepreneurs across all industry sectors in using the nationally recognized Business Model Canvas,* an innovative tool that enables a startup to visualize, develop, and clearly articulate its business model. EIRs meet with client companies regularly to develop a roadmap of actions, deliverables, and resources needed to move forward regarding customer discovery, product development, team-building, marketing, fundraising, and other essential business components. EIRs also help regional startups connect with the vast network of more than 200 ecosystem resource partners listed on our website. Launch NY s National Mentor Network of 2,000+ industry, technical, and business experts provide yet another powerful pool of talent and guidance for Launch NY clients to consult on their journey. Like all high-growth potential companies, Launch NY clients are preparing for investment capital that will allow their businesses to introduce new products and services to the market. Our EIRs are highly focused on helping companies prepare and apply for the Launch NY Seed Fund, as well as angel and venture capital groups, business plan competitions, and other funding sources. Operating within a region that receives less than 3% of the venture capital invested in New York State annually, Launch NY serves a unique role in supporting companies before, during, and after their fundraising efforts. LNY EIR Engagement Model ON-LINE APPLICATION CLIENT INTAKE CALL ENTREPRENEUR-IN-RESIDENCE MENTORSHIP Investment Ready 2016 Engagement 2016 Stats Engagement Metrics Companies Apply for Program Services 102 Applications Received Qualify Companies for Services 91 Intake Calls Conducted Provide Mentoring Services 225 Companies Served Support Launch NY Seed Fund Applications 32 Companies Applied *Alex Osterwalder, The Business Model Canvas, Business Model Foundry, http://businessmodelgeneration.com/canvas/bmc 2 2016 Launch NY Annual Report LaunchNY.org
Dollars Invested from LNYSF $225,000 2016 Launch NY Seed Fund Metrics 32 APPLICATIONS RECEIVED 15 APPLICATIONS MOVED TO DUE DILIGENCE 6 $512,500 INVESTMENTS MADE TOTAL DOLLARS INVESTED IN LNYSF COMPANIES Co-Investment & Follow-On Received $287,500 Fueling Growth With the Launch NY Seed Fund From our inception, we were designed to play an important role in our entrepreneurial ecosystem, providing high-growth potential entrepreneurs with seed capital needed for proof-of-concept. With the introduction of the Launch NY Seed Fund (LNYSF) in 2016, we are positioned to be one of Upstate New York s most active seed-stage investors, becoming the go-to source for startups, and helping our portfolio companies to become investment ready. The LNYSF is a nonprofit fund, built by grants and donations, with all returns coming back to the fund to support investments in future startups in what is known as an evergreen cycle. It is based upon models from other Venture Development Organizations in comparable communities of Pennsylvania, Ohio, and other states around the country who have used a combined approach of mentoring and seed capital for as much as two decades to drive their economy through entrepreneurship. The LNYSF provides $25,000 to $100,000 in investment capital to startup companies at the riskiest phase of development so they can survive and thrive through what is known as the valley of death, when lack of seed capital would otherwise cause good ideas to die-on-the-vine or go elsewhere to create life-enhancing products and services and jobs. Our goal is to accelerate company progress in order to attract follow-on capital from other investors. In 2016, we provided $225,000 in investments via convertible debt notes in six high-growth startups, which have already doubled our money through followon and co-investment from private sector funding sources. Launch NY Portfolio companies also have achieved numerous milestones: new product introductions and revenues, strategic partnerships, use of local suppliers, and contracted and hired talent. 3
Meet Our Portfolio Companies The entrepreneurial landscape in Upstate New York is more exciting than ever. Launch NY has a unique opportunity to find entrepreneurs with both high-growth potential and the likelihood of significant regional economic impact. We re truly investing in the future as we identify, support, and invest in these high-impact companies the new engines of growth. There are many great ideas but there are many factors that go into launching a successful business. Our mentoring is focused on helping companies to assemble the right stuff, and our seed fund is the catalyst that brings it all together, filling a need for initial investment capital. Finding seed funding in the region has been incredibly challenging, so the demand we ve seen for Launch NY to be the source of a new company s first institutional capital has been highly competitive. It s so gratifying to help more startups get a foothold that anchors them in the region to fuel the ecosystem. The quality of companies receiving our first investments has been truly impressive. Lindsay Karas Stencel COO and Fund Manager, Launch NY Rachel Jackson Founder & CEO, Rachel s Remedies Rachel s Remedies Giving Birth to a Brilliant Idea Sometimes, the mother of invention is a mother. Rachel Jackson is a passionate entrepreneur and the founder of Launch NY s first seed-funded company. She invented a therapeutic moist-heat pack while she was a nursing mother who, like so many moms, experienced pain and discomfort. Her innovative solution gives nursing mothers relief from painful problems that are a major reason only 16% of women continue to breastfeed, despite recommendations of the American Academy of Pediatrics. With this funding we have supported marketing and the purchase of equipment, enabling us to keep our manufacturing in Buffalo rather than moving offshore, said Rachel. The opportunity to contribute to our local economic growth is a dream come true. Launch NY Seed Fund Investment: $62,500 Launch NY s Seed Fund has helped Rachel introduce FDA cleared maternal care products in the largest retailers in the country, including Amazon, Babies R Us, Bye Bye Baby, and Target. The company s strong retail presence caught the eye of Dr. Brown s, an established leader in the baby products market, who subsequently formed a partnership with the company that will rapidly grow their domestic and international distribution, while keeping manufacturing local in Buffalo, NY. 4 2016 Launch NY Annual Report LaunchNY.org
TenCar Innovating With Care Founded by registered nurse Georgann Carrubba, TenCar has patented an innovative double flanged system for ostomy patients. Seeing firsthand the need in Crohn s disease, inflammatory bowel disease, and cancer patients, Georgann invented a discreet device to improve security and reliability. TenCar s CHOICE CAP System has an added protective barrier that offers greater resilience to motion and activity, giving the wearer protection against leakage, escaped odors, or detachment. Now the nearly one million ostomy patients in the United States can have the security and reassurance to enjoy more comfortable and active lives. TenCar would not have moved forward without guidance, mentorship, and investment from Launch NY. I will always be grateful for the expert advice and strategic business planning Launch NY provided to me, noted Georgann. Their seed fund investment demonstrates that we have a viable medical device that is close to being ready for pilot production. We are extremely grateful to Launch NY for this investment in our company. Georgann Carrubba, RN Founder & CEO, TenCar Launch NY Seed Fund Investment: $50,000 With the support of Launch NY, TenCar s successes include taking home the winning prize at the Rochester Venture Challenge and completing initial product testing for the CHOICE CAP that is yielding a lighter, more user-friendly product for broader market entry in 2017. Evoke Healthy Foods From Farmer s Markets to Breakfast Tables Rochester-based entrepreneur, Ian Szalinski, has a passion for high quality real food. It turns out he s not alone. After building success with his breakfast muesli, his company now offers a range of whole-grain snack and breakfast foods and continues to penetrate new markets and see revenue growth. In addition to mentoring support, Launch NY s investment has allowed us to accelerate our growth, including launching our new single-serve product line, which will develop Evoke in new distribution channels. We will also be expanding our team with their support, said Ian. Ian Szalinski, Founder & CEO, Evoke Healthy Foods With the help of Launch NY s investment, Evoke Healthy Foods is continuing to enhance their product offerings to meet growing consumer demands, with plans to transition their product lines to organic and gluten-free offerings. They increased their sales by 170% since 2015 and are projected to continue rapid sales growth. Launch NY Seed Fund Investment: $25,000 5
Ron Pettengill, CEO, MotionSavvy MotionSavvy Removing Barriers & Enhancing Lives To some, motion sensing technology seems like a convenience, but to the founders of MotionSavvy, it s a necessity. The RIT graduates, including a deaf co-founder, were well aware of communication barriers for the deaf and hard-of-hearing, especially in business. They developed a way to capture motion in a digital tablet, with the first real-time translation technology that converts sign language to grammatically correct, spoken language. In 2014, their UNI translator was named one of the 25 best inventions by Time magazine. With help from Launch NY and other investors, we re bringing 3D sensing technology to the deaf community, propelling our future into the 21st century and beyond, said CEO Ron Pettengill. Launch NY Seed Fund Investment: $25,000 In addition to supporting implementation of their digital solution into the Greater Rochester International Airport, Launch NY s funding has helped MotionSavvy showcase their technology to national supermarket chains, major banking corporations, and even The Walt Disney Company, who sees the technology as a brilliant way to give deaf and hard-of-hearing guests equal access to the Disney experience. Mitigate Injury Management Faster Care, Lower Costs, Easier Reporting Decades of experience with Fortune 100 companies made Paul Shelter acutely aware of the need for a better workplace injury management system. He developed a proprietary app-based technology solution called CAREline and returned to Buffalo from the West Coast to grow Mitigate Injury Management. His goal: to keep employees and customers safer, streamline regulatory reporting, and reduce workplace injury costs. Paul Shelter, Founder & CEO, Mitigate Injury Management Launch NY Seed Fund Investment: $50,000 Launch NY dove right into our business plan and strategy, helping us move forward. This seed fund investment from Launch NY allowed CAREline to complete its latest software revision, which was critical to sales progress, said Paul Shelter, Founder & CEO. By enhancing its solution, Mitigate Injury Management is scaling the workplace safety support it is providing for thousands of individuals employed by medium and large employers companies that need a costeffective way to work with multiple locations, labor agreements, and healthcare providers, while complying with OSHA and other regulatory reporting requirements. 6 2016 Launch NY Annual Report LaunchNY.org
Buffalo Automation Group Redefining an Industry You hear a lot about driverless cars. Buffalo Automation Group is ready to make sure you ll soon hear about driverless boats. Their innovative technology uses robotics and artificial intelligence to create autonomous navigation systems for both recreational boats and commercial vessels. Unlike traditional autopilot systems that monitor and coordinate information and compass readings, the company s technology is predictive, sensing environmental threats before they arise. Launch NY funding and mentorship helped us successfully pilot our technology on a 750 foot lake freighter and paved the way for us to work on securing our intellectual property, said Thiru Vikram, Founder & CEO. Thiru Vikram, Founder & CEO, & the Buffalo Automation Team With the help of Launch NY funding, Buffalo Automation Group is on track to complete the pilot testing by year end with American Steamship Company, a Buffalo-based leader in Great Lakes vessel transportation. The company has already successfully completed testing of a self-driving speed boat. Launch NY Seed Fund Investment: $12,500 George Chamoun, Chairperson, Launch NY CEO, ACV Auctions Co-Founder, Synacor As a first-time entrepreneur in 1998, I was fortunate to meet mentors and investors who helped me start and build my first company, Synacor (Nasdaq: SYNC), which employs hundreds of people in the region. My advisors then provided me the opportunity to lead one of the fastest growing companies in the region, ACV Auctions. Launch NY takes the luck out of meeting the right people, by giving every promising startup company access to the mentors, capital, and other resources they need to succeed. 7
2016 Financials EXPENSES EIR and Support Services $608,338 REVENUES Federal Grants $325,453 Management and Development $194,351 Private Grants and Donations $717,854 *Total Expenses $802,689 Total Revenues $1,043,307 EIR and Support Services Federal Grants Management and Development Private Grants and Donations *Exclusive of seed fund investments made in 2016. Launch NY Seed Fund investments are categorized as long term note receivables through convertible debt notes. 8 2016 Launch NY Annual Report LaunchNY.org
Platinum Supporters We would like to thank the following funders for their generous support. With your valuable support, we continue to meet the essential needs of the region s most promising seed stage companies by evolving our mentoring services and growing our one-of-a-kind nonprofit seed fund program. The Margaret L. Wendt Foundation This material is provided for in part through a partnership with the USDOC Economic Development Administration. Gold Supporters & Founder s Circle Members We would like to give special thanks to our Founder s Circle who have so generously supported the Launch New York Seed Fund. Founder s Circle Member Founder s Circle Member Founder s Circle Member 43x79 Venture Group Founder s Circle Member Founder s Circle Member 9
We have served over 600 start-up businesses, comprising nearly 1,600 jobs, in Central New York, the Finger Lakes, the Southern Tier, and Western New York. Launch NY is a 501(c)(3) that was established in 2012 to identify, support, and invest in high-growth, high-impact companies and catalyze the entrepreneurial culture of Upstate New York through regional collaboration with ecosystem partners in our 27-county service area. 77 Goodell Street Suite 201 Buffalo, NY 14203 LaunchNY.org