Smart people with great ideas inspire Scott Friedman, and he has the money to help them along. He and his partners discovered that Western New York is one of the most productive areas for intellectual property in the country. We suffer, however, from a lack of organized venture capital. So Friedman built Impact Capital to fill that void and help launch great innovations created right here in WNY.
What is your background and what inspired you to become involved with venture capital?
I’m a business lawyer and partner with Lippes Matthias Wexler Friedman LLP. I'm also one of the general partners for a new Western New York-based venture capital fund called Impact Capital. What has inspired me over the years are interesting people doing interesting work. Whether it’s new technology startups, medical devices, pharmaceuticals, or autonomous transportation, many of these people are brilliant and inspiring. I've enjoyed helping to assemble teams of people who bring complementary skills, experience, and resources to an opportunity to give it the best chance to succeed.
How did Impact Capital come about?
Theresa Mazzullo had been successfully running a seed fund in Rochester called Excell Partners. Impact Capital came about because of a discussion Theresa had with investor Tom Bonadio, about two particularly interesting sets of data.
One was a ranking by state around the amount of intellectual property created across the United States. This includes things like the number of patents filed, number of Ph.D.s, and the number of research dollars awarded. New York state ranks second in the country behind only California. Half of that intellectual property in the second most productive state in the country is coming from Western New York.
On the other hand, if one were to measure organized venture capital dollars available to support those innovations, Western New York would barely be a blip. Silicon Valley would be way out in front. Boston, New York, and Minneapolis are great centers of entrepreneurship. However, Western New York has very little organized venture capital money. Theresa proposed that Tom Bonadio organize a venture fund to fill that void. Impact Capital was born out of that conversation. They invited me to be the third general partner and make it a Western New York Regional Fund.
The three of us each set up an LLC to hold those general partnership interests. Theresa formed an LLC with Rami Katz, the chief operating officer for Excell, and Tom formed an LLC with a number of his colleagues. I set up the LLC Buffalo Capital Partners that included several Western New York entrepreneurs.
What sorts of challenges are unique to the WNY region in terms of entrepreneurship/capital investment? Is it easier? Harder? Why?
Western New York has all the ingredients to create a very vibrant, successful entrepreneurial ecosystem. We have really smart people. We have great resources here in Buffalo. There is UB, Roswell Park, The Jacobs Institute, and many others. Rochester has the University of Rochester and R.I.T. There are great people, great resources, experience in business, and even plenty of money. The biggest challenge is simply connecting those various pieces. I’d say it's a connectivity gap that is being filled. Maybe the pace of that gap needs to pick up. That remains the largest challenge for startups.
What are some ways that we might better support entrepreneurship in our underserved communities?
If one accepts my point about connectivity, it may be that a lot of what's being done remains somehow fragmented. We're a relatively small economy compared to New York City or Silicon Valley. We can’t as easily deal with fragmentation that doesn't allow for robust collaboration and strategic partnerships. How we could serve the developing economy would be to identify new approaches to build collaborations around the existing resources here in Western New York.
Does Impact Capital differ from other venture capital funds? If so, how?
We're quite traditional in many respects. Many venture funds focus on niche industries. One fund might focus on medical devices; another fund might focus on technology. Impact is fairly agnostic as to what we might invest in, as long as it’s an opportunity born out of Western New York or that would benefit Western New York. It's pretty broad in scope. It's the only professionally managed venture fund for the moment in Western New York.
What kinds of businesses align with your organizational vision, and how can entrepreneurs with those kinds of businesses connect with you?
Impact Capital helps early stage companies accelerate their growth through an infusion of capital and business support. Impact works mostly with companies that already generate some revenue. There is a small allocation to companies that are pre-revenue, but nevertheless look interesting for one reason or another. A scientist or researcher at the university might have a great idea and is thinking about starting a company, but is not quite sure how to do that or whether to do that, and what the next steps would be. Anyone can get in touch with me by shooting me an email.
What are some current opportunities you're most excited about and why?
We’re working with a pharmaceutical company that is advancing its cancer vaccine through the completion of a Phase 2 clinical trial. It's a company called MimiVax that spun out of Roswell Park looking to find a new treatment for glioblastoma and other forms of cancer. It's very exciting.
Buffalo Automation Group is developing new technologies to help the shipping industry navigate the waters more autonomously. There are a whole slew of other opportunities from food companies to technology companies to life science companies. There's a lot of exciting work being done here in Western New York.