The growth of the tech industry has significantly impacted urban economic development, but there has been a noticeable shift lately in the major cities that are benefiting from this evolution. Overcrowding and oversaturation in regions like Silicon Valley and New York City are forcing leading and emerging tech companies to consider relocating their headquarters or offices to more affordable and less congested areas. Over the past five years, Buffalo, NY is one of the primary cities in the United States that has seen substantial growth in tech due to the rush away from overly populated cities, with local tech jobs increasing by 9.2% between May 2021 and April 2022 alone. But what is it about Buffalo that recently landed it a number five spot on the list of fastest growing startup cities in the United States?
Construction and Manufacturing Roots
Buffalo is a well-established rust-belt city with roots in construction and manufacturing. One of the ways tech has proven to be a valuable venture in the Queen City is the keen way in which companies are applying modern tech to foundationally blue collar industries that Western New York is historically identified by. Cahill Tech, a construction safety and training software startup headquartered in Clarence, NY, is a great example. Founder Carley Hill grew up in the local Buffalo concrete and construction businesses and knew there was great tech growth potential within Buffalo’s blue-collar industries. A previous 43North competition finalist, Cahill Tech just recently landed $1 million in seed funding to further product development and sales and marketing. Hill saw Buffalo’s market as the perfect opportunity to modernize a longstanding local industry through tech and training.
Thankfully, Hill isn’t the only one who sees maximum potential in Western New York. The region’s industrial and manufacturing bones, paired with its proximity to the Greater Toronto Area and the Great Lakes, present the area as an obvious choice for continued tech growth. Buffalo quickly established itself as a city dedicated to clean energy and the biotech industry by transforming a steel manufacturing site into Tesla’s second Gigafactory, which produces solar panels and solar cells for the reputable tech giant. Additionally, Buffalo was one of 21 cities to be awarded funding from the Build Back Better Challenge. A $25 million grant will be put toward reviving Buffalo’s manufacturing footprint, furthering support for the growing tech workforce, and creating more jobs in both the tech and manufacturing sectors. This grant piggybacks off the tech growth we have seen over the past few years in Buffalo. In the fourth quarter of 2021, local tech companies collectively raised over $24 million. More recently, Clean Fiber, a cellulose insulation tech company, received a $10 million investment to scale their production efforts in Buffalo. CleanFiber is just one of 32 local companies to receive private funding in 2022 to boost the technology and manufacturing industries in the Buffalo-Niagara region.
Affordability and Training Opportunities
Low cost of living, affordable real estate, ample continuing education opportunities, increased funding, and startup friendly culture are also attractive to companies with their eyes on Western New York. The Black, Asian, and Hispanic communities in Downtown Buffalo and neighboring suburbs have all grown immensely since 2020, which has driven the developments of affordable and market-rate apartments and condominiums across the area. Historically, the Buffalo-Niagara region has a desirable housing market, delivering spacious housing options at a low cost, compared to other urban/suburban areas of its size. There has also been an uptick in student registration and programming at the Northland Workforce Training Center, a public-private institution devoted to closing the local labor pool skill gap. Increased state funding for the training center was approved for 2023, with goals to expand its welding and electrical programs. The support Northland has received since 2018 has led to an 85% job placement rate for graduates, further proving the value it is providing to Buffalo’s labor presence in the tech and manufacturing workforces.
Funding and Growth Potential
When it comes to attracting startups to Buffalo, 43North continues to drive forward progress by connecting startup founders to an enthusiastic workforce and passionate community dedicated to innovation. To date, they have raised $1 billion in venture capital and have created $4.4 billion in market value across the 59 companies in their portfolio. They just awarded their eighth startup competition cohort of winners $1 million each to relocate to Buffalo and expand their operations. The most notable 43North success story might just be ACV Auctions, an online wholesale auto auction firm that went public in March 2021, with its initial public offering raising approximately $414 million. ACV’s rapid growth marks it as Buffalo’s first “unicorn” startup, reaching a valuation of $1.5 billion before going public. The City also hosted the New York State Innovation Summit in October 2022, an event that showcased companies and researchers who are paving the way for developing technologies and modern production structures to drive NYS’s technology-led economic growth. By creating educational programs and hosting a high-profile events centered around technology and growing startup businesses, Western New York is marking its spot on the tech map.
Revamping Buffalo’s Central Business District (CBD) has been a collective goal between top Buffalo-area investors and developers. With the core of the city perfectly positioned between the emerging waterfront and the University at Buffalo Medical Campus, tech-centric companies have been opening offices in prominent CBD locations like Seneca One Tower, Fountain Plaza, and the Lafayette Court Building. Most notably, M&T Bank is paving the way for state-of-the-art tech space with its 330,000 square-foot Tech Hub inside Seneca One and up and coming second Tech Hub at the newly renovated Lafayette Court Building. In addition to rolling out two tech-based workspace designs, M&T’s Buffalo offices have implemented a Technology Development Program and the Z Development Program Mainframe Apprenticeship to attract and retain talent, an approach that varies from past strategies to draw workers into Buffalo. Rather than building out workspaces once the employee-base is established, companies are betting on Buffalo by building amazing spaces that draw employees into the City’s budding tech industry.
While there is still room for Buffalo’s tech industry to really flourish, the buzz and momentum are only growing stronger. There is no denying that Western New York is making great strides to become a leading East Coast city for the technology and manufacturing industries, and with recent major investments to cement more tech and manufacturing jobs and educational opportunities into the region’s economic fabric, there may be a regenerative boom on Buffalo’s horizon.