Blakely's been cultivating this expertise from a young age. He attended the University of Buffalo where he earned dual bachelor degrees in biology and psychology in two years. He was 24 when he founded Advanced Refractory Technologies, Inc. (ART), a manufacturer of high-performance ceramics, composites and advanced coatings. And he grew the company from a staff of two to 325 employees with both local and international operations.
In 2001, Blakely sold ART to Tyco International and went on to found The Inventures Group, an advisory firm focused on delivering technology assessments, strategic business planning, and technology commercialization assistance to both U.S. and international businesses. He and his staff of experts assist entrepreneurs, innovators, and corporate executives in developing new product and technology ideas by building productive organizational structures, establishing viable commercial networks and devising marketing and funding strategies.
According to economist Enrico Moretti, the United States overall has "shifted from an economy centered on producing physical goods to one centered on innovation and knowledge jobs." In his book, "The New Geography of Jobs," Moretti explains how "(i)nnovative industries bring 'good jobs' and high salaries to the communities where they cluster, and their impact on the local economy is much deeper than their direct effect."
Blakely has analyzed this multiplier effect from his own ventures and his findings mirror that of Moretti when it comes to the value of jobs created by entrepreneurs. The economic impact can be two-three times greater than that of traditional manufacturing jobs. "What was particularly interesting when I analyzed the companies that I had started and the spin-offs and start-ups that were generated from them was that, on average, these organizations employed nearly five times as many employees per million dollars of sales as large companies. As importantly, the types of jobs that they created were much higher value positions - including skilled manufacturing, engineering, and professional jobs - than you generally expect to see with small businesses. So it wasn't just the quantity, but it was quality of the jobs as well that was more favorable in these businesses. To me, that is the way to reenergize an economy."
While not everyone can endure the rigors of being an entrepreneur, Blakely thrives in that milieu. And he believes that there are many others in the Buffalo region with the same drive, talent and vision. But what they need is an "ecosystem" consisting of like-minded innovators, support services and start-up and early-stage funding to bring their ideas to market.
An
educated workforce is also one of the most important factors in creating this
environment. Moretti points to a broad
national trend that he refers to as the "Great Divergence" which started in the
1980's: "Cities with many
college-educated workers started attracting even more, and cities with a less
educated workforce started losing ground."
While Western New York is home to a large number and wide variety of
colleges and universities, many graduates, including science, math and
engineering majors, leave the area for economic opportunity elsewhere. With close ties to the University of Buffalo,
Blakely has worked to keep this talent in WNY.
He worked closely with past UB President William Greiner and Provost
Betty Capaldi to develop the framework of what is now called STOR - UB's Office
of Science, Technology Transfer and Economic Research. The organization's mission is to interface
between faculty/student research and the commercialization of new product and
process development. In a May 6th
story in The Buffalo News, Dr. Robert Genco, Vice Provost and Director of STOR,
said that over 180 businesses were started or assisted by STOR.
Related to his efforts with STOR, Blakely also established First Wave Technologies, a for-profit
organization that assists university researchers in advancing their
technologies to a stage where they can form the basis for a successful
enterprise and enter the commercial marketplace. "When I created First Wave, my vision
was to demonstrate the viability of this approach - working closely with
university faculty and the technology transfer office to bring new ideas and
concepts across the so-called 'valley of death' and create fundable, viable
start-up businesses," he said. "First
Wave has successfully done this several times and I am hopeful that others will
now try to replicate and emulate the approach.
We could use about five to ten more 'First Wave' companies working with
the great researchers we have at UB, Rochester Institute of Technology, the
University of Rochester, and the other research institutes in Upstate NY."
In 2011, Blakely had the opportunity to advocate at the state level when he served on the Entrepreneurship and Business Development Working Group of the WNY Regional Economic Development Council (WNYREDC). His workgroup's recommendations included creating an entrepreneur academy, developing best practice incubators throughout WNY, and reforming state and federal regulations that all too often hinder start-up companies.
While he sometimes felt like a fish out of water, given the political and bureaucratic elements involved in the process, Blakely supported the efforts of the WNYREDC by providing an authentic entrepreneurial perspective to bear on the group's work. "I was very impressed by the commitment of the leadership and participants in the process and know that they are all committed to the success of our region. My hope is that our state government understands the urgent need for major reforms in the operating environment for businesses in NYS - from taxes to regulations - and the equally urgent need to make capital available to investment in technology companies - through investment tax credits, dramatically increased allocations of seed, start-up, and development stage venture capital, and other incentives."
Blakely also emphasizes the need for new sources of venture capital for local entrepreneurs: "If we had the (financial) infrastructure to support new ideas, I have no doubt that Buffalo could be on the national and international map." To that end, IVG is initiating its own venture fund that will go beyond the personal investing Blakely has done in local start-ups as well as those outside the region. This initiative is just getting underway with Blakely tapping into the venture and private equity capital networks that have financed his previous ventures.
There were many opportunities that Blakely had which would have meant leaving the area. He has served as the CEO of companies in St. Louis, MO, Fayetteville, AR, New York City, Columbus, OH, Santa Clara, CA, and Troy, NY. He chose, instead, to stay in Western NY and lives in North Buffalo with his wife Lin who worked with him as his VP of Human Resources at ART for nearly 20 years.
Many of his local clients feel the same. "They're not looking to get out of Dodge," he said. "But they are looking for signs that the region is interested in keeping them here. I believe that what we do at The Inventures Group sends a clear message that there are reasons to hope and reasons to stay." That's good news for the economy.
I've been working with Keith for the past year, and he truly understand how an innovation ecosystem works. He also understand the strengths and weaknesses of the local economy.
Keith is spot on when he says there is a huge need for more capital. Like most regions around the country, Buffalo lacks any real angel or venture capital presence True, there are a few active people around, but the number of people who have money to invest and know the industry that they are investing in are almost non existent in Buffalo.
That's one of the major problems holding back Buffalo's tech sector. It isn't just a matter of guys with money -- you can easily lose a lot of money by playing this field. Nope -- you have to know how to find the companies that will exit at 10X within 2 to 4 years. And ideally, you have to know enough about the industry that you can play an active role in helping the company achieve its goals quickly and provide a high ROI.
However, we can find those guys, and we can find those companies. What is much more difficult is to find the money. If Gov. Cuomo is serious about a game changing plan with that billion dollars, he could look no further than creating a 50 million dollar fund, have people like Keith and others manage it, and that would push Buffalo to the stage of a major player in the biotech sector.
Yes, totally I agree. I think we had this conversation earlier that this is something that really should be done (The $50 million dollar fund) to create jobs in Buffalo for now and the future.
So who do we talk to and how do we get their attention?
ha, exactly, I don't know. But today in the Buffalo News in the Business section there is an article about this.
http://www.buffalonews.com/business/business-columns/david-robinson/article918069.ece
It is about two partners, Jordan Levy and Ronald Schreiber who "have built two highly successful technology companies in the Buffalo Niagara region. Now, they want to help show other would-be technology entrepreneurs how it's done - and that it can be done in Western New York."
I thought it was interesting that there are people who have money looking to invest because they know this is the future of the economy. But I still don't think there is enough private money to make a big difference, and thus the public fund by the state could be huge.
"If Gov. Cuomo is serious about a game changing plan with that billion dollars, he could look no further than creating a 50 million dollar fund, have people like Keith and others manage it, and that would push Buffalo to the stage of a major player in the biotech sector."
Would $50M in state taxpayer venture capital really make Buffalo a major player in biotech?
With what other U.S. regions would that $50M of NYS funds put us into the same ballpark for that? Just asking.
Absolutely! First, you have to understand the current situation. Five years ago, the total amount of money available for VC and angel investing was about $100 billion. Today it is less than $20 billion. Mind you, this is the TOTAL money available, and this the money that funds all the new googles, apples, microsofts, facebooks, all the biotech, bio life --- everything -- all the new innovation that our country needs.
Worse, HALF of all VCs are out of business from that of five years ago. (Cite: Kaufman Foundation). The situation is quite dire and isn't changing any time soon.
On the other hand, there is no shortage of good companies getting started and needing funding. We see this every day. The remaining VCs have said that there has never been a better time to invest in innovative companies.
SO: The last thing we need is more startups. We have plenty in the US. The problem is that there is no funding for them. I personally know at least a dozen really terrific biotech companies that have promising new ways to treat cancer, cut health care costs by a third, or change the we diagnose certain diseases. But there is no money for them. If they fail to get it, they will simply die on the vine. We literally cannot fund all the good companies that already exist. And now Levy & Co. want to start another incubator? That's just nuts, and shows they really don't understand the situation.
Most incubators are failures. Companies don't need free real estate and free fax machines. The better ones provide mentoring from serial entrepreneurs who've been there done that and can find you the strategic partners that you need. Buffalo simply doesn't have many successful serial entreprenuers.
What these companies need is funding. And today, it is almost impossible to raise a fund. No one is. The existing funds are fully out, or are winding down. So if Buffalo raises even a small fund of only $20 million, it will attract a LOT of attention. When you are the only person doing something positive, I guarantee people will sit up and notice.
So that's a big start. $100 million will overnight make Buffalo the new center for biotech investing. But here's the kicker that Levy and all the local pol don't understand. You cannot invest that $20, or $50 or $100 million all in Buffalo companies. You can't. Or, you can, but it's the fastest way to piss all that money away.
You will be able to fund about two or three companies in all of WNY worthy of getting that money. That's it. So now, you have many millions more to invest. You now have to look outside of WNY, and look to CA, MD, IL, or even Canada and find top notch companies worthy of investment. (Remember, the whole point, the ONLY point, in investing in any company is to finding one that will grow and become big enough to provide at least 10X on your money. If the fund puts $500,000 into a company, you have to plan that within 3-4 years, you will cash out at $5 million, and that money goes back into the fund).
So, you cast a wider net, and you find small companies willing to take the funding from this Buffalo Fund with the proviso that they relocate either entirely, or partially, to Buffalo. If they don't want to move to Buffalo, you pass and move on to another company that will.
Within one year, you can have perhaps 20 of the most promising biotech companies from around the world relocated to Buffalo. Now, doesn't that make a heck of a lot more sense then trying to homegrown them all? And if you have 20 of the world's most promising, the level of technology in Buffalo rises exponentially. The research level for UB would go through the roof.
If just one of those companies goes IPO, it will get attention. If two go IPO, then we have a proof that we have an fully functioning innovation ecosystem, and that in turn will attract VC money from CA and TX, as well as other places. Plus, the IPO itself will create many more millionnaires, who will then in turn become angel investors in Buffalo.
You want Buffalo to become a magnet for biotech and biotech funding. A fund of any size will do that, and do that quickly.
I know all this because my business partner is a major VC based in San Diego, and this is how he made both San Diego and Hawaii leaders in biotech. Additionally, he created several cross border funds with Israel, Mexico and Chile, all designed to do this, and all were highly successful. In each case, the fund grew greatly, so the net cost to taxpayers was actually a net gain, and it helped jumpstart their biotech sectors in each place.
Imagine that -- the fund grows and actually returns more money to taxpayers than they put in. (Incidently, 13 states have similar funds, and all are successful, and most of them are red states. NYS does not have one.)
The real key is that you need competent fund managers to run the fund, find the best emerging biotech companies, and then stay on top of those investments so that they don't go sideways on you. The real work begins once you actually invest in a company. That's why you need experienced people.
Hope that answers your question!
ONe more thought. Suppose Levy or Cuomo build an incubator as they promise. If that incubator holds 20 companies, we know that the averages are that 19 of them are going nowhere. But all 20 companies suck up funding -- where are they going to get their startup money?
The answer usually is friends and family, maybe some grant money. But sooner or later, they have to start the rounds and ask for A round funding, and later B round.
So we have one good company, and the incubator hails it as a success. But where is it going to raise the $5 million it needs? Certainly not Buffalo -- there simply isn't enough money or talented investors. So eventually, that one good company from will have to go to CA or TX to seek funding. If it does, guess what those investors will say? "We'll give you the money you need, but you need to relocate to San Diego."
So the very thing that you think you are doing -- growing a company in Buffalo for Buffalo, is a failure. We end up losing the company. That's certainly one of the reasons we are losing Wilson Greatbatch. It all comes down to who has the money as well as the talent calls the tune.
Notice that this has nothing to do with tax rates or regulations. So the usual culprits of high taxes and red tape are simply not at issue here. It all comes down to who has the money. Until Buffalo can raise the money on its own, raise it from wealthy locals, or get it from Albany or whatever, it will always remain stuck where it is. What happens when funding from UB dries up, as it inevitably will someday? When that happens, the Buffalo biotech industry will dry up as well.
If UB were smart, it would spend $100 million not on shiny new buildings, but on creating a fund. (AGain, money that isn't an expense, but an investment that would grow perhaps 50% within five years). That would propel UB to the upper ranks of biotech commercialization overnight, IF they have the right management team. But it's much easier to build a nice building, and you can cut ribbons out front.
Rand>"Hope that answers your question!"
Unless I'm overlooking something, it didn't try to answer my question of "With what other U.S. regions would that $50M of NYS funds put us into the same ballpark for that?" (The 'that' being status as a "a major player in the biotech sector" from your previous comment.)
For example, this article quotes someone as defining the nine emerging U.S. regions for biotech, then also mentions a few others as more established...
http://www.genengnews.com/insight-and-intelligence/new-biotech-clusters-in-the-u-s-are-scrambling-to-challenge-established-regions/77899526/
"The real estate firm Jones Lang LaSalle (JLL) highlighted nine examples of what it called emerging bioclusters. The regions in descending order as ranked by JLL are Minneapolis, Raleigh-Durham, Seattle, Chicago, Denver, Houston, Florida, Atlanta, and Indianapolis.
Arguably, though, the first three clusters on their list are far past that status. Minneapolis’ cluster has long been focused on medical device manufacturers anchored by the Mayo Clinic. Research Triangle Park, which includes the cities of Raleigh and Durham, has attracted several biopharma giants including Biogen Idec and GlaxoSmithKline.
Seattle has a growing research base: Leroy Hood’s Institute for Systems Biology completed its move within the city to an expanded headquarters in May. Additionally, Fred Hutchinson Cancer Research Center expects to complete work on a new building this year. Seattle is also home to the Bill and Melinda Gates Foundation.
Erin Bovee, senior research analyst, life science with JLL, said the firm ranked 16 regions in which it does business on a scale of six equally weighted criteria: high-tech research and hospital/medical employment as a percentage of total employment; science and engineering graduate students (per 1,000 individuals aged 25–34); NIH funding; biotech and medical device venture capital funding in 2010 tracked by MoneyTree Report; R&D spending as a percentage of GDP; and size of academic and research institute facilities in square feet.
Chicago and Denver scored highest in percentage of science and engineering graduates (fifth and seventh best, respectively); Houston, in NIH funding (seventh); Florida and Atlanta, in research space (seventh and third, respectively); and Indianapolis, in biomedical employment (sixth)."
And this one mentions four states as leading for this...
http://www.genengnews.com/insight-and-intelligence/largest-u-s-biotech-clusters-faced-similar-challenges-this-year-as-seen-elsewhere/77899521/
"The four states with the nation’s largest biotech clusters showed that they too were not immune to challenges common to most U.S. regions seeking to build their life science presence. Hurdles included a capital squeeze particularly for early-stage biopharmas, the reality of the industry’s international growth, and the need to attract new businesses and retain existing ones.
All four top-tier biotech states—California, Massachusetts, North Carolina, and Maryland—did, however, find numerous ways to address these challenges. They rolled out new financing programs or tweaked existing ones. In some cases they reached out to regions around the world. In others they identified promising niches within their clusters. Signs of success could be seen in a series of new construction and expansion projects. …"
So, was just wondering what you had in mind of what a $50M VC fund from NYS govt would put Buffalo relative to others… in other words, what you meant by 'major'?
Regarding the feasibility, I'd imagine difficulties would include
- how NYS govt would try to predict which co's are best bets to receive taxpayer VC funds in such a volatile industry,
- how to convince other places in NYS that Buffalo should get this state spending but not Rochester, Syracuse, Ithaca, Yonkers, Elmira, Utica, etc, etc