Buffalo startups are approaching a collective $100M raised this year
The steady drip of substantial rounds for locally based tech startups continued this week with the news that RoutingBox raised $30 million in growth funding.
The Amherst-based company, which has 25 employees, will embark on a significant growth spurt aimed at becoming the dominant software player in the non-emergency medical transportation space.
Hiring is expected across engineering, artificial intelligence, product, sales, customer success and corporate functions.
Here are five takeaways from the latest big raise in Buffalo.
Buffalo is a big part of this story
Like many of Buffalo’s transformative startups, RoutingBox’s story is one of decisions. Talented principals Paul Snyder, David Puehn and Brian Snyder decided to stay in Buffalo. They decided to commercialize a product that was initially an internal tool.
And ultimately, after several years of roaring growth, they had to decide how to position themselves in an industry that’s growing quickly but also seeing substantial software consolidation.
Minnow or shark? They chose the latter.
The round, led by Phase Line Growth Partners, will lead to a substantial investment in new talent across the business, with much of that hiring expected to be in Buffalo. It will also enable RoutingBox to begin acquiring smaller players and integrating their operations into its Buffalo-based nerve center.
If all goes well, Buffalo is set to become an epicenter of a fast-growing software niche.
“We had an opportunity with this transaction to think carefully about where we wanted to build the next chapter of RoutingBox, and we chose Buffalo,” said Paul Snyder IV, CEO and co-founder of RoutingBox and CEO of Founders Holding Co. “This is where the company was created, where we have built an exceptional team and where we believe we can continue building a nationally significant technology company. We intend to compete across the country while continuing to invest, hire and grow here in Western New York.”
Expect more from the RoutingBox team
A quick but important point: this isn’t the kind of deal that sets the expectation for slow and incremental growth.
Phase Line is a growth-equity investor, a category that sits somewhere between traditional venture capital and private equity. Unlike an early-stage VC bet, growth equity generally comes after the basic business model has been proven and with a specific financial thesis for making the company much bigger.
In other words, the expectations just went up.
Phase Line is putting nearly $30 million behind the belief that RoutingBox can grow substantially, improve its financial profile and ultimately become considerably more valuable. The company now has the capital to hire aggressively, expand nationally and acquire competitors. The expectation is that it will use it.
“The platform sits at the intersection of operations, compliance and revenue cycle, making it mission-critical infrastructure for its customers,” said George Eggers, co-founder and managing partner of Phase Line Growth Partners. “We believe RoutingBox has an opportunity to become the defining technology platform in this market, and we’re excited to support the team as it pursues that opportunity.”
Approaching nine figures
Buffalo’s startup economy continues to generate strong signals, with RoutingBox becoming the fourth local company to report a substantial raise this year.
Others include:
Viridi: $20 million-plus in equity funding
Food Nerd: A $7.5 million seed extension round
That’s $77.5 million and counting. And that’s before we start getting granular with other local startups that raised angel, pre-seed and seed rounds.
A new building to host a growing team
Series B recently wrote about two tech startups headquartered in Buffalo’s northern suburbs — Streamline Auto and SelectFI — both of which are demonstrating strong momentum.
RoutingBox joins that cohort with the recent purchase of 100 Sylvan Parkway, a 12,000-square-foot building which will accommodate most of its growth (the building has several other tenants which are staying).
Call it the Amherst Software Mafia?
“RoutingBox’s decision to continue building its national headquarters here in Amherst is exactly the kind of economic development we want to see in our community,” said Shawn A. Lavin, Supervisor of the Town of Amherst. “This is a locally built technology company attracting nearly $30 million of investment, creating high-quality jobs and choosing Amherst as the place from which to pursue its next stage of national growth. We are proud to have RoutingBox call Amherst home and look forward to watching the company continue to grow here.”
Founders aren’t going anywhere
The deal will allow the company’s founding team to capture some of the value they’ve created, but a significant portion of their equity will roll into the new deal.
Snyder will remain CEO and Puehn will stay on as CTO, with Phase Line’s investment effectively putting more resources behind the team that got RoutingBox here.
For the founders, then, this is both a reward and a recommitment. They’ve created enough value to realize some of it today. They’re betting there’s considerably more to create tomorrow.
