Launch NY has bigger funds, more investors and a more mature portfolio. CEO Marnie LaVigne says the fundamental job hasn't changed.
When Launch NY began investing in startups more than a decade ago, the organization was trying to fill one of the most obvious gaps in Upstate New York's emerging startup ecosystem: Who writes the first check?
These days, the ecosystem looks considerably different.
Launch NY's first limited partner fund has already begun returning capital to investors. Its $15.775 million LP Fund II is actively deploying capital. Its Investor Network has grown to more than 400 accredited investors. And its portfolio includes companies such as Dimensional Energy, Ognomy, HelixIntel and Exostellar that have gone on to raise significant outside capital or achieve exits.
But LaVigne, Launch NY's longtime president and CEO, is still wrestling with essentially the same question.
How do you meet promising startups where they are? And in the process, how do you help them become something much bigger?
Series B caught up with LaVigne to talk about Fund II, the evolution of Launch NY's investment philosophy, the growing Investor Network and why she's particularly excited about October's New York State Innovation Summit in Buffalo.
Series B: Launch NY has been doing this long enough now that you can actually look backward at a generation of investments. How has your idea of an investable startup changed?
LaVigne: The bar has definitely gone up.
I look back at some of our first deals through the nonprofit fund, and some of them probably wouldn't get funded today. That's natural. As the ecosystem gets more sophisticated, founders understand more about what they need to bring to the table to have a viable startup.
But there's a tension there that we think about all the time.
When we invested in Exostellar, for instance, the founder was an untested faculty member. He was about as green as you can be as a businessperson. But he got surrounded by the right people, made the right connections and built a company that ultimately became a tremendous success with its acquisition by Qualcomm this past spring.
That's what makes early-stage investing tricky. Our mission is still about allowing people to try this pathway and helping create more high-growth companies. We want the bar to keep getting higher without losing our willingness to be there at the beginning.
Series B: So how do you reconcile those two things? Better deals, but still being willing to take the early risk?
LaVigne: That's probably one of the biggest philosophical discussions we have.
It's easy to imagine a fund where you're only trying to pick the obvious winners. But when you're investing this early, you don't know. And our mission is bigger than that.
One of the best things we can do for this community is help create really good deals that other investors want to look at. We want investors to know that when something comes through Launch NY, we've done the work and there's a viable opportunity there.
That doesn't mean every company has to become a massive venture-scale outcome. There are singles and doubles and triples, too. You have to be realistic about the pathway for each company while still helping build companies that can create jobs and economic impact here.
Series B: Fund I gives you some evidence now about whether that model actually works. What are you seeing?
LaVigne: We've returned about 20% of Fund I already, and we still have a number of companies we're really excited about.
We've had exits from Patient Pattern, Dimien, Verivend and Exostellar. Then you look across the portfolio and there are companies like Azuna, Dimensional Energy, HelixIntel, Ognomy and 3AM Innovations that continue to have really interesting potential to not only create returns to investors, but also incredible economic and market innovation impact.
Dimensional Energy is a great example. We initially invested when the company was valued within our usual first-time company investment range of $3 million to $5 million., and it recently raised capital at a much higher valuation.
Those are the kinds of outcomes that demonstrate why being willing to go early matters.
Series B: And now you're investing out of Fund II. What does that portfolio look like?
LaVigne: We're really excited about it.
We've invested in companies including Playground, Bridge Green Upcycle, Dentite, Edenesque, Carbon to Stone, PhysicianX and SelectFI.
SelectFI is one that has been especially interesting to watch because you've seen experienced talent from ACV Auctions become part of that management team. That's part of what a more mature ecosystem starts to look like. People gain experience building one company and then that experience gets recycled into the next generation.
At the same time capital markets are still tough. Companies are coming to us because raising money is more challenging than ever, and we're trying to help them as best we can.
Series B: Launch NY and Radial Ventures are working toward some exciting announcements. What can we say right now?
LaVigne: There’s a lot of excitement about Radial Ventures and how it will yield more startups, so we're really pleased to make it available to accredited investors who want to support it as well through the Investor Network
It’s incredibly powerful when a community can work together to make that early investment, help the company put together a real financing round and hopefully make the opportunity attractive to other investors who can come alongside us.
So much of our work is about about helping the company get to the next level in a way that makes sense to outside investors.
That's what we want the Investor Network to do: give more people access to these opportunities while creating another source of capital for founders.
Series B: You've now got more than 400 accredited investors in that network. Does that begin to change the capital environment for startups here?
LaVigne: That's the goal.
Capital isn't just about Launch NY writing a check. We want more people participating in startups. We want founders building relationships with investors, and we want investors getting comfortable looking at early-stage companies.
The more of those relationships we create, the stronger the entire ecosystem becomes.
And that's part of why we're so excited about the New York State Innovation Summit coming to Buffalo.
Series B: The Innovation Summit has been around for years. Why does this year's event feel different?
LaVigne: It has changed tremendously.
Twenty years ago, something like this was almost a tech-transfer-office gathering. It was heavily focused on researchers and academic innovation.
Over the last few years, you've watched it broaden into a much bigger ecosystem event. We've gotten increasingly involved. In Syracuse two years ago and Rochester last year, we hosted investor office hours and brought in investors from inside and outside the region to meet with our most promising startups in Upstate NY.
This year, with the Summit in Buffalo, we and others like NY Ventures, are putting even more emphasis on bringing outside venture capital investors into the room.
That's a big deal.
Series B: What is Launch NY specifically doing around it?
LaVigne: We're really trying to make it useful for founders and investors.
We'll have our Founders and Investors Celebration during the reception on Oct. 27. We'll have the opportunity for investors, founders and others to meet with Exostellar founder Hakim Weatherspoon about building his company and ultimately going through an acquisition.
We're also offering a new Investor Connect service where founders can sign up and use an AI-enabled matching process to identify investors whose thesis fits their company and vice versa for investors who sign up to meet startups. Those introductions can happen virtually, so the opportunity extends beyond whoever happens to physically be in the room.
The message to founders and investors is basically: Come to Buffalo. Meet people. Put yourself in the flow of opportunity.
Series B: That sounds like the same philosophy you've been describing with the investments — meeting companies where they are and then surrounding them with more resources.
LaVigne: Exactly.
Getting that first investment doesn't make things easier. In some ways, it gets harder.
Once you're in the portfolio, the company needs more sophisticated talent. It needs customers. It needs additional investors. It needs people with networks who can shorten the amount of time founders spend struggling to figure everything out themselves.
That's where we're increasingly focused.
We still want to be there with that first dollar. But then the question becomes: How do we help that founder get to the next thing faster?
That's the journey. And we're still figuring out better ways to do it.
