When it comes to spotting the economy’s unicorns, Start-Up New York has been a disappointment

One can count on the New York Post not to beat around the bush. “If it doesn’t work,” reporter Kirsten Conley’s article said last Wednesday, “change the name.”

She was referring, Conley wrote, to governor Andrew Cuomo’s oft-criticized and embattled Start-Up New York program, now expected to be renamed the Excelsior Business Program. Her next paragraph quoted state senate majority leader John Flanagan as inquiring tongue-in-cheek whether the change in nomenclature meant “we’re going to have to buy a couple of hundred million in new TV ads.” Note a certain tinge of sarcasm.

Vivian Yee writing in The New York Times a day later was a bit more generous about the governor’s adjustments in the controversial no-taxes-for-ten-years program. She quoted E.J. McMahon of the Empire Center think tank saying the state government was “still pretending that they’re venture capitalists who can spot a unicorn, and unicorns will grow generally quite oblivious to whether they’re offering financing in a tax-free zone.”

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Cuomo’s plan to revitalize upstate New York’s economy by creating a series of high-tech hubs at least temporarily fell flat in a corruption inquiry involving his own advisers, Yee concluded.

So it’s back to the drawing board, with new rules and different employment expectations put in place. But it’ll be the same model, according to a gubernatorial spokesperson: innovative academia-business partnerships coupled with tax-free incentives.

Start-Up New York’s website boasts that 202 businesses statewide have joined the program in its two-plus-year existence, “committed to create 4490 new jobs and invest over $251 million across New York.*”

The asterisk appears again immediately below: “*Projections over a five-year period.”

In other words, the committed levels of new jobs haven’t happened yet. And many of them never will. In addition, several Start-Up projects have been stillborn, others have decided to locate elsewhere, and still others aren’t going to meet their projections. So the overpublicized program has been retargeted to genuine startups rather than larger firms filched from other states.

Twelve of the 202 new businesses statewide have started in the seven-county mid-Hudson region. Of those twelve firms, five are affiliated with SUNY Ulster (none with another of the eight other academic participants in the region, SUNY New Paltz). The five, none of which have created more than a handful of jobs, include Anchor ID, David Shropfer’s Kingston firm that has attracted $1.3 million in five rounds of investments; Uphomes, a recently formed Kingston-based company headed by Libby Zemaitis which will build energy-efficient high-tech custom homes; Regen Water, a manufacturer of wastewater treatment systems whose principals, Tim Cornelison Sr. and Jr., are known in Stone Ridge, Kingston, Saugerties and Cairo; Mid-Island Aggregates Distribution, a industrial waster recycler from Connecticut owned by the Brian Heidel family (he described himself in The New York Times as “the dung beetle of the mining industry”) that’s focused on the Callanan Industries site in Port Ewen; and finally Sustainable Waste Power Systems, which has been constructing a Rube Goldbergian truck-sized prototype agricultural waste-to-energy system for the past two years in a large modular building at the back of the LaDolce machine shop on Malden Turnpike in Saugerties.

Mike Gillespie of SWPS, who was working on the equipment last Friday afternoon, was preparing to truck it down to North Carolina to show to a potential customer. He was doing last-minute tests, making sure everything was working correctly. The company had made no fewer than 150 changes in the complex system since I had seen it almost two years ago, he told me. SWPS presently has four employees and uses local outside technicians and specialists. Two years ago, it told Startup New York it expected to create 38 positions.

SWPS has about the same number of outside investors as before, Gillespie said, but there’ve been some changes. Capital has come from New York City and elsewhere, but not from the Hudson Valley. The company has been working with SUNY Downstate scientists. Once it gets going, the enterprise’s Start-Up application says it expects to find many of its employees at SUNY Ulster.

 

There’s another approach, sometimes competitive to the state’s and sometimes complementary to it, to encouraging startup businesses. Last Thursday evening, the Upstate Venture Association of New York held what it termed its “annual celebration” at Mount St. Mary’s College in Newburgh that drew about 150 people affiliated in various ways with “the entrepreneurial community,” a substantial contingent of whom attended from Ulster County.

Keynote speaker Mary Stuart Masterson talked about the growing film-TV-media production industry in the Hudson Valley. She had first begun coming up to the region from Brooklyn in 2006. “I knew it was just better here for our family,” she said. She found the region “crawling with talent” but lacking ways for people to make a living.

UVANY executive director Noa Simons is also one of the five managers of the Kingston-based Hudson Valley Startup Fund, a year-old group offering angel capital.

In a recent interview, UVANY president Jennifer Tegan, an investor in various ventures both upstate and downstate, explained the difference between the two from her perspective.

“I do a lot of work in New York City, and everything is very different there,” she said. “There’s a lot of investors, a lot of entrepreneurs, networks and support. When you come to upstate New York, we have all of these same resources but it is more spread apart, and not as deep. We need to connect the dots and those resources for entrepreneurs. This is very important to maintain a thriving and healthy ecosystem.”

Which approach yields the better upstate results, the targeted blend of strategy, bureaucracy and politics personified by Empire State Development or the scrappy, nimble, decentralized private-enterprise-oriented approach of UVANY? Theoretically, a combination of both working together would be optimal. Many of the players at the UVANY event have played both, and will continue to do so.

In the past two years, Start-Up New York has fallen woefully short of expectations, while the other state programs picking the economic-development winners have had a mixed record. Meanwhile, the modest UVANY network, which has scored its successes and failures without direct governmental funding, continues to enlarge its constituency.

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