David Colligan on Covid-19 and the startup climate in Buffalo
By Dan Miner
Buffalo Business First
David Colligan was there in the beginning. So when he talks about the resiliency of Buffalo’s startup community against a global pandemic, he brings a sense of history to the discussion.
Colligan was a driving force behind the creation of the Buffalo Angels investment group in 2008 and the Launch NY initiative several years later. He has watched as private funding for startups went from a few million dollars a year, at most, to more than $200 million last year.
Colligan, who is also managing partner of Colligan Law LLP and a board member of the Ralph C. Wilson Jr. Foundation, spoke to Business First recently about humble beginnings and the path forward. His comments have been lightly edited for clarity.
You invest in startups and advise them on legal matters. What’s your sense of how they’re doing as a group right now?
The Buffalo Angels did a review of all their investments, and almost everyone had PPP loans and was making them last. It’s been a way to weather the storm.
I like to use the rainforest analysis (a theory that regional innovation ecosystems are unlocked through human behavior, popularized in 2012’s The Rainforest Book, by Victor Hwang and Greg Horowitt). Buffalo’s startup community used to be a desert. We did a study for Launch NY, and we could not find a million dollars in all of Upstate that had been raised for investing in entrepreneurial companies. But the last two years, we were over $200 million, and this year we’ll be over $100 million. It makes that $1 million number look pretty paltry.
My prediction is that Buffalo has advanced far enough and, combined with these PPP loans, there will be something to salvage when this is all over. That doesn’t mean we’re going to be able to pick up where we left off, because we left on a high note, but even if that gets knocked back by half, then it only puts us back a few years. It’s a lot easier place to start from than $1 million across all of Upstate.
To what do you attribute the resiliency you’re describing?
I believe there is now a viable entrepreneurial ecosystem. I think that entrepreneurial mentality has taken over the common thinking in Buffalo.
I would say the climate in the Western New York startup ecosystem is better than a temperate rainforest, but not as good as a tropical one. Temperate means there is a viable community that still has a ways to go, and I think before Covid we were a step beyond that. We got to the point where people are giving up high-paid jobs to switch over to startups. And they're doing it all over Buffalo. Startups have become, if not an industry, an occupational choice in Buffalo.
It’s not just little companies with one founder anymore starting to show some shoots. Companies are employing people and providing investment opportunities.
You’ve said that your startup activity is tied into the business of the firm.
The reason I started the Buffalo Angels in 2008 was because, as a corporate lawyer, you have these mom-and-pop corporations that are constantly changing hands. If I have about five big transactions a year, and three of them are on the sell side, then 60% of the time you’re losing a client. Pretty soon you don’t have any clients left. And the reason for that was in Buffalo, we didn’t have enough new business to create business for lawyers. I thought if we got a startup community together, it would be better than no activity at all.
We have that now. People refer viable startups to me as clients – I have at least three that I personally believe will be valued in the eight-figure range, which is when they can start attracting venture capital. And that doesn’t include startup clients for (firm partners John Moscati Jr. and Matthew Pelkey and associate attorney Margot Knab).
Those three startups, clients of mine could be broadly defined as medical, digital and compliance. Those are very very different things, and none of them are Rust Belt, in my opinion. There is strength in that diversity.
This article originally appeared in Buffalo Business First.