From Culturally Creative To Creating Business, New Startup Fund Grows The Economy From Within The Hudson Valley
by Paul Smart
So the Hudson Valley’s not only survived the Great Recession of recent years, but also started reinventing itself, just as Brooklyn reinvented itself from being one of New York City’s rougher boroughs into a beacon of youthful vim, vigor and self-conscious creativity. We’ve moved beyond second to full time homes again, established a distinct locavore culture, and built on generations of arts pedigree to become a region as known for its artists and art venues, in all media, as any major urban area.
How do we turn this intellectual and hipness quotient of wealth into a financial edge, the Hudson Valley’s fabled “quality of life” quotient, into region-wide employment? In other words, what comes next to get the Hudson Valley and neighboring Berkshires, Catskills, Gunks, and Taconic Hills to rise into the moneyed echelons of Silicon Valley, the Boston tech ring, or even NYC itself?
Enter the region’s first “angel” investing group, the Hudson Valley Startup Fund (HVSF), founded last October to provide funds for fledgling business ideas and job-generating activities. How will they do it? The way other regions have—by bringing together already-successful entrepreneurs looking to collectively help raise the local economic ocean. Consider it a new club, of sorts, for those willing to chip in $25,000 and plenty of time-sharing so more can prosper in the area, creating a new regional “ecosystem” along the way.
“Our mission at Hudson Valley Startup Fund (HVSF) is to provide seed funding and mentorship to entrepreneurs, creating strong companies in New York’s Hudson Valley region and delivering investment returns to our members,” reads the new group’s mission statement. “Our portfolio of companies have high growth potential throughout the Hudson Valley. We are looking to help build businesses that provide good-paying jobs in our community and generate returns for our members… HVSF is focused on finding companies where growth will accelerate through investment and mentorship. All potential investments go through detailed due diligence evaluating all aspects of the business, which typically takes at least 90 days.”
The Fund, begun by a group of local business owners and entrepreneurs, officially “came out” at a recent economic summit on start-ups and investing attended by Lieutenant Governor Kathy Hochul at SUNY New Paltz, where it was announced that they not only had over 30 investors and $700,000 to invest, but also several projects underway and dozens of new possibilities lining up for consideration.
HVSF has defined what it’s looking for as similar to other “angel” investing groups such as one covering Eastern New York, or a pioneering effort in Fort Collins, Colorado. They note an interest in truly local initiatives, scalability (meaning the potential for growth and adaptability to other markets), unique business elements (from technology to procedures), means for payback (through income or merger/acquisition by other entities), clearly identified markets, and strong players from the start. But then they also whittle down their list of “industry” interests to Agriculture, Biotechnology, Clean Technology, Computers “and Peripherals,” Fashion, Food and Beverage, Internet/Web Services, and Software.
According to HVSF’s first investor, Dutchess County entrepreneur Johnny LeHane, the underlying idea is transformative, aiming to replace the IBM of 30 years ago with a new atmosphere that emphasizes a self-perpetuating job market through encouragement for more entre- and solo-preneurs.
“We’re not looking to change the economy but fit in missing pieces,” he says, pointing out how more smaller businesses translates into a need for more guidance for start-ups, and start-up funding. “It’s time to create a sustainable economic ecosystem in the Hudson Valley.”
The fund’s founding manager Tony DiMarco—who cut his teeth in start-ups after years at IBM, and seven years running a business incubator out of Marist College in Poughkeepsie—adds that HVSF is about growing new businesses from within the Hudson Valley, and not just attracting other businesses here through various incentives. You show the greater business community that the region is ready and willing to support its own evolution and sustaining sense of business growth.
“I’d seen success incubating companies, but all of them needed funding,” he notes. “We saw we were the only region in the state without an angel network and decided to start one ourselves.”
The Hudson Valley Startup Fund currently has 34 members and $700,000 in funds, and is aiming to close in June with a final fund of $1 million to $1.5 million, and 50 or 60 members. This will go to about a half dozen start-ups. But both LeHane and DiMarco add that everyone who comes to them will get some form of attention and help; it’s part of HVSF’s mission, and a way of building towards ever-bigger iterations of the fund over the coming years.
So how does this all shape or reshape a sense of the region as a competitive new economic force? Is it our agriculture or an emphasis on new digital frontiers that will become the defining element for the Hudson Valley? Are we still poised to be on the vanguard of a new solar world or will we simply be the playground, once again, for that earlier wave of big-time entrepreneurs such as Vanderbilt, Astor, Rockefeller and the like? Will our cultural heritage, and continuing role as a hotbed for artists have any effect in our new business and jobs climate?
LeHane says there’s no shifting of existing cultures or quality of life in mind. And the 60 or so companies that have come forth to date (with 8 of those doing actual pitches and half of those moving on to deeper “digs” for info) have included high tech and ag/food products, software, and even cosmetics, as well as coming from a wide geographic area with a concentration of software ideas emanating from Kingston and Beacon/Peekskill, and ag ideas from Dutchess County.
“We noticed a lot of activity around Kingston, but not enough from Poughkeepsie,” LeHane adds. “We’re working with business ideas from the area’s colleges, and hoping to get the local chambers of commerce more supportive of new businesses.”
Key to success for those seeking funds from HVSF is having products and not just ideas, as well as an eye to quick returns for investors.
DiMarco goes one step further, noting the difference between “digital creatives” and food and beverage items and “artsy creative,” although he feels all can gain a synergy once the business climate starts to shift towards more recognition of start-ups as a key component of the region’s economic success.
“We’ve already got a spin off from what we started in Westchester County,” he adds. “In our mind it’s always ‘The more the merrier.’ We’ve got nice momentum.”
For more information visit www.hvstartupfund.com.