The Business Council of Westchester announced a partnership Aug. 6 with Initiative for a Competitive Inner City in what represents the latest in a series of moves by public and private organizations to stimulate entrepreneurship across the greater New York City region.
Advocates and investors say that for the first time since before 2008, there is a strong interest among the Westchester and Fairfield County, Conn., business communities in supporting startups and early stage companies, which have struggled to generate awareness and secure financing in the wake of the financial slowdown.
The partnership between the Business Council and Boston-based ICIC extends to Inner City Capital Connections, a training and networking program designed to expose urban businesses to potential investors.
Through the Capital Connections program, which was founded in 2005 by ICIC and Bank of America Corp. and is sponsored by the U.S. Small Business Administration, the SJF Institute and Pacific Community Ventures, 275 companies have combined to raise $154 million in equity and $252 million in debt and create 2,790 direct and indirect jobs.
The Westchester Coalition for Business Development, launched by the Business Council in late 2010, has said access to capital represents the single biggest impediment to small business and entrepreneurial development in Westchester.
Business Council President and CEO Marsha Gordon said her group would act as a bridge between companies seeking financing but in need of guidance and the mentors, resources and investors available through the Capital Connections program.
“When you”™re talking to finance providers, you have to have your act together. You have one opportunity,” Gordon said. “So we felt that working with small businesses and providing them with links to education and training and those resources was key. And this is a national program that we”™re able to really highlight in Westchester.”
Businesses accepted into the Capital Connections program will attend an all-day training program Oct. 24 in Detroit focused on finance, strategy, marketing, human resources and business pitches, followed by a reception and conference Nov. 8-9 in New York City during which business owners will be able to meet and pitch their businesses to investors.
The conference “really helps them (businesses) position themselves not for now but for tomorrow, so when the need arises, they have the relationships that they can tap into,” said Hyacinth Vassell, manager of Inner City Capital Connections.
Applications are due at the end of September.
”˜We have all the assets”™
In Connecticut, the Business Council of Fairfield County is partnering with the Stamford Innovation Center to form one of two initial, state-sponsored Innovation Ecosystems.
The Innovation Ecosystems initiative was launched earlier this year by Connecticut Innovations Inc., a state-backed vehicle designed to promote entrepreneurship, with hopes of creating a statewide network of business accelerators.
Separately, the Westchester County Association in May announced the formation of its own business accelerator, the Blueprint Accelerator Network, which has secured $200 million in financing and in-kind service commitments to date.
The accelerator network began accepting business proposals in July, with plans to take in three companies by the end of October and another one or two companies by the end of 2012.
Nicholas Puro, co-chairman of the WCA accelerator and managing director of e3 Investment Partners, based in New York City, said investors began to distance themselves from startups even before the recession struck.
“In the past three to five years ”“ even before the market collapsed in 2008 ”“ many private investors moved away from doing early-stage deals and moved to doing more later-stage deals and investing in IPOs and public companies,” Puro said, “rather than having to wait five to seven to 10 years to get money out of an early-stage investment.”
Puro said pension funds and other entities that traditionally invest in venture capital funds are under much tighter constraints than they were prior to the recession.
As a result, he said the funds are often forced to invest in areas that are more likely to result in early returns.
“I think that”™s made it very difficult for the venture capitalists who would like to see early-stage deals to even do them,” Puro said.
But, he said, what brings investors back is success.
The goal of the Blueprint Accelerator Network is to provide participants with a strong foundation so they will be more attractive to venture capital funds.
“If we can provide them with some services and access to capital, then I think we”™re doing them a good service and we”™re doing the business community a good service,” Puro said.
Barry Schwimmer, a co-founder and managing partner of the Stamford iCenter, said the organization is not seeking “to reinvent the wheel.”
“We have all the assets here, all the components here for a dynamic startup and entrepreneurial environment,” Schwimmer said. “What we really see ourselves as is a catalyst, a provider of services. We really believe that once we establish this, by establishing a nexus around entrepreneurial development ”¦ we”™re going to breed some really fantastic businesses here.”
Role of government debated
Since taking office, Gov. Andrew Cuomo and Conn. Gov. Dannel Malloy have aggressively pushed their respective economic development agendas.
Cuomo last year orchestrated a regional economic development competition that saw more than $750 million in new or accelerated funds allocated to various job-creating projects across the state, with a second round of funding scheduled for later this year.
In January, Malloy committed to deploying $250 million in new funds over five years to promote entrepreneurship, with the state kicking in half the funding and Connecticut Innovations ”“ which generates revenue from its own investments ”“ supplying the remainder.
Puro said government involvement should be limited to creating an environment in which businesses can thrive, with private investors then stepping in to fund various companies.
“It”™ll be interesting to see if the public money can really be put to the right use,” he said. “To me, it depends on the people who are making the choices of which businesses to invest in.”
Christopher Bruhl, president and CEO of the Business Council of Fairfield County, said public sector support for entrepreneurship has been “essential.”
“While things would have happened, can you accelerate the positive parts of cycles, can you mitigate the negative parts of cycles? I think that”™s what”™s happening with the public sector”™s engagement here,” Bruhl said. “It”™s an effort to accelerate something into a pace that will bring more growth, more jobs now rather than it gradually growing over time.”
