Latest / The Wilmac Wire / James Senall | Scaling NextCorps, Funding Founders, & Enabling Innovation

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James Senall | Scaling NextCorps, Funding Founders, & Enabling Innovation · The Wilmac Wire

• speaker-0: Good morning, good afternoon, good evening. Thanks for tuning in for another episode of the Will Mac Wire. We appreciate you joining us. So one of the things that we love about being based in downtown Rochester is just how close we are to a lot of cool stuff. Like our office is right in the middle of it. And if you know downtown Rochester, you know there's more and more happening. One of those organizations that we've had on our radar for a while is NextCorp. which is basically the central hub for startups and innovation in greater Rochester. They're running accelerators, supporting founders, connecting companies to capital, and they're right by us ⁓ over at the Sibley building. So today's guest is someone from that world, Jim Sinall, president of Nextcore and co-founder of the Rochester Angel Network. Just as a sneak peek, Here's what you can expect out of today's conversation. We talk a lot about Jim's journey and how he ended up at the center of Rochester startup ecosystem now that he's been at NextCourse since 2009. We talk about the investing side, which if you're a regular listener of the podcast, know Steve loves to talk about that. We discuss how angel investing works and how AI is changing what founders are actually building and what investors are looking for. We have some honest conversation too about what Rochester gets right when it comes to innovation and what still needs to change for this region to get the national recognition that it deserves. And lastly, your final sneak peek, you're going to get a look ahead at what the next chapter of Rochester's tech scene could actually look like. Thank you to Jim for joining us in studio at Rockvox Studios. It was a great conversation. Let's get into it. Welcome to the Will MacWire. I'm Emily Miller, joined by my co-host, Steve McDonald. On this show, we talk the drivers, the leaders, innovators, and decision makers pushing customer interaction technology and AI forward. And because we're proud to call Western New York home, we also spotlight the drivers in our own community, the people and organizations shaping growth and innovation right here. Let's get into it. Coming to us right here from Fairport, New York. He's an RIT electrical engineering grad who went on to earn his MBA from Simon Business School at the University of Rochester. He's co-founder and managing director of the Rochester Angel Network, connecting local investors with early stage companies since 2003. He's been the president of NextCore since 2009, which is the central hub for startups and innovation in Greater Rochester. On his watch, I have to call out a few of these stats. They've supported over 796 companies. raised over $733 million and they're currently in a $10 million expansion within the Sibley building. NextCore is also home to Luminate, which is the world's largest accelerator dedicated to optics, photonics, and imaging startups. He was named to the RBJ Power 100. Welcome to the Will MacWire, James Snell. speaker-1: for speaker-0: Yeah, we're happy to have you in studio in person on this beautiful sunny Rochester day. So thanks for driving in. All right, we're gonna get things started with a really quick icebreaker called This or That. I'm gonna give you a couple questions and I'll give you two options and then you can tell us what you choose. So we'll start with the easy one. ⁓ Finger Lakes or Downtown Rochester? speaker-1: Ooh. You said easy. I will say Finger Lakes just because they're beautiful. Being anywhere on the lake or on a winery tour in the Finger Lakes or, you know, we always bring guests when they travel or visit the town to come on visits there. I would say for sure for leisure, it's that. speaker-0: Love that. Let me ask, did you play a part in moving into the Sibley building with NextCorp? speaker-1: That's why that was a hard question to answer because the reason we moved downtown was to try to stimulate development of downtown Rochester and we thought we could be kind of an anchor for helping make that happen. maybe on the business professional side, I'll say downtown and the leisure weekend side. speaker-0: Yeah, we're not too far, a couple blocks over in the five-star bank building. I've walked over to Mark on Main multiple times. All right, next one. Early stage company or growth stage company? speaker-1: ⁓ I would say it's really fun to work with the early stage. You know, they're still trying to figure it out. Maybe they're even pre-revenue. They've got an idea. They're just looking for help to shape it, to figure out is there a business there or not. It's just a fun stage. ⁓ speaker-0: We'll get to it a little bit later, but I have to imagine that AI is facilitating a lot more startups in the area. is. Yeah, that's exciting. We'll get to it. Okay, and last, this or that question, mentoring a founder or pitching to investors? speaker-1: Well, mentoring is much less stressful. So probably go with that. Although it's always fun to kind of pitch investors because you're kind of in sales mode and you want to win the sale. So there's sort of competitive aspects to it as well. But probably mentoring if I had to choose one. speaker-0: Love it. Awesome. Well, thank you for humoring us. Now our listeners know a little bit more about you. Like I said, I'm a sucker for an icebreaker. We always got to start it off that way. Okay, Jim, we're going to start off with your career journey. So can we get things going by having you tell us a little bit more about your career path? So obviously you started in engineering and manufacturing. then now today you're leading Next Corps. Like, Next Corps, how did you get there? speaker-1: Yeah, well, like any journey, know, probably not the way you planned it when you were in college, but ⁓ so far so good. So, ⁓ yes, I started engineering, ⁓ always was a kid, the tinkerer kind of person, like to take things apart, figure out why they work the way they did. So, guidance counselor said, you should be an engineer. And so that was the pathway. ⁓ Went to RIT for undergrad, graduated and got a job in North Carolina. Vowed never to live in Rochester, New York again ⁓ after scraping my car off in one of RIT's faraway parking lots one winter saying, I'm out of here. So I moved to Charlotte, North Carolina ⁓ and worked in an organization called AMP Incorporated later bought by Tyco Electronics, but a big international manufacturing kind of business. made electrical connectors, electrical wires and sub-assemblies. And I worked in various different manufacturing plants kind of supporting that. ⁓ And so good experience, I got to rotate around different facilities. I moved up to Harrisburg, Pennsylvania, where their headquarters was. But the whole time there, I sort of was looking at some of the other job functions there, product management and like, why are we doing things the way we are? You know, I had this lens of engineering, but so I always got more more interested in the business side. So decided to go back to school and get an MBA. And that got me more into entrepreneurship. ⁓ Took a job out of business school, moved back to Rochester for business school. in a startup company, was with them for a few years, ⁓ watched the good, bad, and the ugly of startups. In Rochester? In Rochester, yeah. A company kind of ahead of its time, they were making micro displays for what are now head worn glasses, but this was 20 years ago. ⁓ And then from there, ⁓ actually the startup that I was in was in an incubator for High Tech Rochester, which is what Nextcore used to be known as. So I got to know the organization way back then, 2000. Was ⁓ with them for a while, did some consulting for other startups for a while. Met a guy who's coming to town to create what is called Greater Rochester Enterprise now. Mike Finney was the incoming inaugural CEO. Told him what I was doing. He brought me on to GRE to focus on emerging business sectors and where could the community go as far as growth opportunities. So we looked at. climate and clean energy and other things, as well as, and we'll come back to this I'm sure, the ANGEL Network. So when I joined I said, well, when I come on board, what we really need in Rochester is a venture fund or an ANGEL Group. Let's try to get something going under the auspices of GRE. And so that's where we got the ANGEL Group initially formed. And then from there, I was working with NextCorp quite a bit and then that opportunity arose and I came on board there. speaker-2: Are you from our original? speaker-1: Originally from Buffalo, Buffalo. Yeah, and then ⁓ undergrad and then I've been here ever since so most of my life has been in Western New York. Yeah speaker-0: Very cool. So when you stepped in the next core in 2009, it was obviously a much smaller organization. So what were your early priorities as you started to grow it and scale it? speaker-1: Yeah, so the reason I kind of took the job was at the time there was a lot of data nationally published by the Kauffman Foundation and others that showed most of the net new jobs created in the community come from early stage companies. So the more businesses you form and scale, the more jobs and the better economy you're going to have. historically in Rochester, you look at all the wealth that was created by Codex Zierachs Bausch and Lomb, look around town, all the things that you know, the wealth created funded. So it wasn't a stretch to say we need to do more startups. So that's where I wanted to put my energy. And so when we, when I first joined, we looked at ⁓ what are we doing today? We had a small incubator in the suburbs, which nobody knew about. We were not very visible at all. ⁓ And so we said, okay, we got to get more visible. Let's think about expanding, moving downtown. being more central and then think about what other kind of programs are we seeing nationally that we're not doing in Rochester. So that gets to more like startup accelerators versus just an incubator. We can talk about what those terms mean. But yeah, really started looking at what areas can we grow into. speaker-0: Can we dig into that a little bit more? Because I know there's quite a few programs that you built at NextCore. So can you talk us through that a little bit more? speaker-1: So today we operate, we kind of call it about six different programs under Nextcore. At the Cibola building in downtown Rochester, we have our startup incubator. So an incubator is typically a facility, a place where a startup can go and work and they're surrounded by coaches, mentors, connections to investors. We have prototyping labs, we have access to all kinds of different resources. So you go there, you're working side by side with other founders. And we've got about 70 local tech startups in our incubator in Rochester. speaker-2: When you say tech, what is that? speaker-1: Yeah, great question. ⁓ Everything's kind of tech nowadays. So we also use the term scalable. So if there's a company that could be $10 million or more someday, they're looking to really grow a big kind of business. That's the kind of company that we work with. If it's, want to be a solo consultant or, you I want to do a coffee shop on the corner. That's probably not our bread and butter. And we refer those to many other players in the ecosystem. ⁓ So that's incubation. Then we have several accelerator programs. An accelerator program is typically a six month long program where you have an application window. You select maybe 10 that get in for that year. They go through actually a pretty heavy curriculum altogether. At the end there's a big, call it a demo day or finals event where we have investors. They present, hopefully we get investment, but then we're starting the cycle over again. So you mentioned- of like Shark Tank. Yes. So we get a bunch of companies ready for Shark Tank. Yeah. You mentioned Luminate, is the biggest one. So optics, photonics, and imaging startup companies open to anyone globally. They come to Rochester one week a month throughout the program ⁓ where we introduce them to things like the Finger Lakes as well as downtown Rochester and lots of other assets. ⁓ And so we just finished cohort eight of that program. ⁓ So we have about 80 companies that have gone through that program. ⁓ We have one called Venture for Climate Tech, which is focused on clean energy and clean tech. ⁓ businesses. ⁓ We have a program called Manufacturing Accelerator, which is for startups that are building a physical product. They've got a prototype, but they have no idea how they're going to make this in scale once they get big orders. And so it's helping them figure out the manufacturing process, connecting the manufacturers in the region. ⁓ We have a software, sort of a boot camp program called Embark. ⁓ That takes people with no software experience or even college degree for that matter. And historically had taught them kind of no code software development tools over a six month program. So they could go out, create a company or improve their job or get a new job with these new skills. That program has evolved now because of AI tools. And so what was relevant a year ago and that program is no longer relevant and changing. And the last thing we do is we support small and mid-sized manufacturers throughout the nine county Finger Lakes region. So we're one center out of 10 across New York state that does that. speaker-0: Wow, okay. ⁓ Within those programs, how many are coming from Rochester, New York, or more of them coming from outside the state, outside the country? speaker-1: Yeah. So all the incubator companies are local. Some of the companies in the other programs are local, but the majority of those accelerator programs are from out of state or out of country. speaker-2: Are we talking like college kids or kids out of college? Is it like two or three of them or just one guy coming with an idea? How does that? speaker-1: Yeah, so for the incubation program, so the local tech companies here in Rochester, those are probably our earliest stage. So a lot of those are pre-revenue, maybe one or two person teams. Very few are college students or college level. there used to be a stat, the average age of a tech founder was 39 years old, which kind of surprises people. You see the movie, know, Facebook movie and everything else, you're like, drop out of college, start a company. That does happen, but it's not typical. So they're usually people that have been in industry, they've always wanted to do a startup, they've seen a problem. mean, you guys every day probably say, why is it done this way? Wouldn't it be great if next time you say that to yourself, think, okay, what could be a solution to that? And there's a potential startup idea. And then for the accelerator programs, those are typically a little later, they maybe have some customers and some revenue. And those are typically also more mature teams. speaker-0: Okay, interesting. speaker-2: And the accelerator, are you like getting them from one to five, five to 10, 10 to 50? does that? speaker-1: Yes. So depending on where they're at, a lot of times they're coming in, they have maybe some customers, some revenue, or at least a letter of intent from a customer. Some traction. They've proven there's some traction or customers want what they have. They may have raised a little bit of money already, but then we're accelerating that to say, okay, let's drive that customer interaction or find you a partnership partner or find you an investor that can put kind of that fuel into growing quickly. speaker-2: Are you guys helping them build processes, recruit, or are you more matchmaker? Like, are these are the investors you need to be talking to? speaker-1: It's a lot of connections. And so it could be on the product development side too, the Luminate program for example, which is optics and photonics. We have 150 optics companies in the photonics cluster in Rochester. Plus contract manufacturers that know how to build all this stuff. And so when they come in and they might have a product challenge, we can introduce them to technical experts or manufacturing experts. But then also it's, what stage are you at? What industry are you at? Here are the 10 or 15 investors in that sector. Let's get you in front of them. Let's facilitate those conversations. Let's get you prepped to have the conversation and just try to make all those things happen. speaker-2: So that's a lot of companies just for optics coming all in. And you're mostly talking about the actual hardware. speaker-1: Yeah, those are mostly hardware. speaker-2: Are there, I would imagine a perfect opportunity for a startup in Rochester would be build a vertical SaaS company for the optics. there types of, are there those types of, especially with the AI happening right now. speaker-1: We can get you into the incubator tomorrow. There are a few examples. So we had one company that, so for people developing hardware optical products, ⁓ finding components, you can search this catalog or this website or this other thing. They created a platform that automatically does all that, looks at really the deep spec you're looking for and helps you surface where to find these kinds of things. So there are definitely some software and SaaS products. speaker-2: In that specific program you're getting people from all over the country, world. speaker-0: Okay, so obviously there's a lot of innovation happening within Nextcore, like within the Greater Rochester region, like how would you describe Nextcore's role within that tech ecosystem? speaker-1: I would probably say we are, we tend to be the sort of first point of contact for someone that wants to scale a company, an early stage company. And then like I said, if it's not something that we have program for, we'll get them to the right resource. It can be confusing to navigate, ⁓ you know, all the different, you know, there's small business development centers, there's SCORE, there's, you know, food incubators, there's other stuff. ⁓ But we can help navigate that. we are being kind of, ⁓ recommended that we should play a little bit even more leadership role ⁓ in getting the word out. So, you we don't want to be the best kept secret in town. ⁓ Every time we tour someone through our space, you know, the typical comment is I had no idea these resources were in Rochester. So shame on us, but we have to do a little bit better job on that front. speaker-2: Do you guys still work closely with GRE and One Rock and Chamber and all that? speaker-1: Yes, all the above. speaker-0: Yeah. Okay. Very cool. Yeah, I mean, you're so close to all of them too. has to be nice to facilitate that. ⁓ Lovely. All right. So do you have any more questions on NextCore before we get into Rochester Angel Network? speaker-2: one last question. Kind of just an overall macro question. New York, well we'll take Rochester in general, is not known for venture capitalism and investment in these types of companies. Especially when you talk with Silicon Valley, Boston, you can even talk about very blue states that are still much more attractive, I would say. How do you guys recruit people to come here and do that? speaker-1: I think the good news is, so for sure, when you look at the venture capital statistics, the needle hasn't moved a whole lot on most of the money goes to California and some to New York and Austin and Boston, right? A couple of factors. One, investors nowadays, and probably post-COVID had something to with it, are more willing to look at second tier cities and metros. And from that standpoint, we're a pretty appealing one because of the innovation that's here, the... highly educated people, you know, we rank top in Pats per capita. So from second tier regions, and I don't like to use that term because I don't think we're second tier, but ⁓ we're kind of ⁓ up there. Secondly, ⁓ you can build companies with a lot less capital today. And so it's less important. There are stats and we're actually pulling stats to put together an innovation report for the region right now. ⁓ There are a lot of VCs that invest here that nobody knows about. And so we're kind of combing through that data right now to tell the story that, yes, they will invest here. speaker-2: to that point with AI and technology, definitely bootstrap a lot more than you're used to being able to. Do you guys kind of go through that conversation with the startups? Like, hey, you could probably keep going for a little while before you need an investor, or, all right, now's the time to go. Are those conversations that you guys foster? speaker-1: Absolutely, yeah. know, we kind of tell, generally speaking, know, don't take investor money until you need to. It's always a balancing act, right? Because you can grow faster if you have the capital to do that, hire more people, you know, get out there, sales and marketing. ⁓ But don't do that until you have traction or at least customer validation. And you can get that today ⁓ very inexpensively with a lot of these AI tools that are out there. speaker-0: Okay, wonderful. All right, so we'll move into our second theme more on the Rochester Angel Network. we mentioned it in your intro, but you co-founded the Rochester Angel Network in 2005 and you continue to lead it today. ⁓ One, why did you start it? And two, what got you interested in the investing side of entrepreneurship? speaker-1: So the reason I was interested in helping get that thing off the ground, and as I mentioned, we did it when I came on board to GRE, was that there's just lack of capital. ⁓ There was not an angel group, there were angel groups popping up kind of all over the country, we didn't have one. ⁓ We had one years before that kind of wasn't active anymore. One of the things I was doing when I was consulting before joining GRE was working with a group to try to create a new venture capital fund. ⁓ So that was another attempt to say there's not enough capital here in town. How do get more? So as far as building an innovation economy and what's next for Rochester, clearly there was lack of capital. So that was really the driver. speaker-0: Okay, and then obviously like we talked about, and I think you touched on this a little bit in your career journey, but you started in engineering and manufacturing. Like what drew you to that more business side? speaker-1: ⁓ It just to me was kind of more interesting to kind of see how businesses are run, why they're run certain ways. ⁓ I still like having the technology and engineering background so I can kind of understand. So I always say I know a lot, I know a little bit about a lot of things. That much about lots of things. So for the first five minutes at any party, I can talk about any topic and then I have to go like leave and go somewhere else. So don't ask me too many questions about going deep on stuff. ⁓ But it's fun. And on the investor side, you get to see some really interesting technologies and companies, like nonstop. It's just companies coming, looking for investment to, you know, pursue their dream and their mission and some just really interesting stuff. speaker-2: I think for our listeners, could you kind of give the difference between a venture fund and an angel investor? speaker-1: So a venture capital fund is, it's an organization, they raise money from typically institutional investors, ⁓ and then they deploy that money and then they pay that money back. So they're managing other people's money for a return on investment. Typically set up as a 10 year fund, they gotta get the money back. And the institutional investors could be pension funds, it could be university endowments, it could be private equity groups, whatever, but it's other people's money. Angel investors are investing their own personal dollars. ⁓ They could do that through a fund, they could do that just directly in the companies, but that's the biggest difference. It's their own money. They may have different motivations for why they're doing it as well. So, VCs are doing it for return on investment, period. Unless it's a specialized fund that has other mission. But angel investors, we always just say they're doing it either to have fun, ⁓ make money, or to kind of sort of mentor the next generation. And ⁓ it could be any of those or all of those, but we do have folks that maybe they view it like, I'm going to invest in these companies. If I don't get my money back, it's not the end of the world, but I'm still in the game. I'm helping give back and that kind of stuff. So it's a good group to be around. speaker-2: So to that point, I don't think the angel world has talked about that. No. We've had numerous guests down here talk about the VCs and private equities, growth equities and whatnot. One of the things I find interesting is you said there's different reasons why they get involved. And when you talk to a VC, obviously they could hit 5 % and be successful. And PEs are looking at that five to seven year range. It seems like angel investors can be a lot more flexible with the timing and how they kind of communicate and partner with the companies. Is that getting more popular? And then the second would be, it family, like family offices most of the time? speaker-1: So yes, they can be more flexible for the first part of the question, especially if they're investing directly. And so we will not, not through the phone. Yeah. So we could have some investors that invest in a company and usually an investor, particularly VC says when you can have an exit, when I get paid back, I need you to get acquired by somebody. So you get money and you pay us back and I pay my investors back. Some of our angel investors over the years have said, if I invest in a profitable company and you start paying dividends, I'm good with that. Like keep paying me every year. speaker-2: through a phone. speaker-1: And a VC could never do that. So that's kind of one difference. So there is more flexibility there. ⁓ The second part of the question was sort of the remind me on. ⁓ speaker-0: Yeah, like what kind of companies do angel investors typically like are drawn towards, I guess. speaker-2: Yeah, we can go with that. I'll remember it in a second. I'm known to ask like three questions. speaker-1: ⁓ They are, so they can invest in things that A, they have experience with. So if you have investors that made all their money in real estate and then you bring them a deal that is how do you do building management of energy systems in real estate complexes? They might say, I understand that business. I know it inside and out. ⁓ by the way, as an angel investor, I'm also happy to be a mentor and make introductions for you. ⁓ So it depends on kind of their personal interests, really what they get excited about. speaker-2: It was family offices. The individual that has lot of wealth that has a family office normally falls into that category. speaker-1: It would fall into that category, although you see more of those falling into more professional investor category where, so if someone has a family office and they have somebody managing that, they're taking part of that and putting it in early stage investing. But it still is kind of more on that investment portfolio side. ⁓ Most of the members of Rochester Angel Network, for example, you you think about the local billionaires and super high net worth people, they're not angel investors in a group. They do their own thing. They invest big sums of money. speaker-2: the unit. speaker-1: So it's really folks that have had success, they've built their own companies, they've made a lot of money and they are interested in putting some of that back to work. speaker-2: And then they'll group it together in a group. And then something that was interesting that you just said, I think of growth equity. That's an equity firm coming in at a lower percentage, not majority. And part of that partnership and the value that I would look at a growth equity is they're in it with you, scaling. They're mentoring, they're bringing you into a different network. And it sounds like angel investors could possibly be doing the same sort of thing. speaker-1: Yes, I think at each level, probably that happens. It's just a much smaller dollar amount. So the angel network might invest three to $500,000 when you aggregate everything together into a deal where a company's raising a million dollars. And so they get in at that level, obviously a lower valuation, and then they hope they're going to bring you to the series A round venture capital investor that's going to put five million in and then hopefully later growth equity that's putting a lot more money in. speaker-2: That's interesting, because my whole notion of angel investor has been like Tom Galsano, Bill Gates, those big guys who are just doing it solo and they're doing the series A themselves. speaker-1: That's right. That whole tier. do I get the first million dollars in the business so I can get. speaker-2: Yeah, so that's like a lot of friends and family. So people would do it. speaker-1: Just in an organized way. we do age-educational sessions. We talk about portfolio. You shouldn't do one or two deals. You should do at least a dozen to spread the risk, kind of all that stuff. speaker-0: Okay, great. Before we get into the AI piece, like with Nextcore and Rochester Angel Networks, you've obviously been involved with them for significant period of time. time. What's kept you motivated to stay with them? ⁓ speaker-1: ⁓ It's just interesting, right? So every day you don't know what you're going to kind of encounter. And so I think that's what keeps it keeps you motivated to keep doing. At Nextcore, it's sort of like the job's never done. So we keep thinking about, ⁓ here's this new thing we could do, which could really have a big impact. Let's work on that now. Or we're going to expand our facility. It's like, all right, let's do that now. ⁓ How do we help more companies? Bro, you know, the capital piece, how can we attract more capital here? Can we partner with VCs out of town? Can we be an intermediary for a bunch of VCs? Like, there's just nonstop number of ideas. speaker-0: Yeah. speaker-2: Do you jump into most of that or will you get get in the weeds with some of these startups and be like, well, we should maybe think about this, that. speaker-1: ⁓ I've worked less and less directly with each individual company over the years. It's always fun. So we're more on the kind of overall organizational side. speaker-2: Which makes sense. speaker-0: Business strategy, for sure. Sorry, just had to ask. you talked about how the job is never done and how things change very quickly. And obviously, AI comes into the picture and changes things even quicker. Obviously, too, you mentioned it's lowering the barrier to building software companies. And obviously, we're seeing the same within our own organization. So how are you seeing that change show up inside NextCore with how founders build and what investors look for? speaker-1: I'll answer it a couple ways and also with the caveat that I am not an AI expert. So you guys are more expert, I'm sure, than I am. ⁓ So maybe the first mention is the speed with which you can build a software company is mind-blowingly fast now. ⁓ We did a program called AI Startup Jam funded by a springboard grant back in ⁓ probably three or four months ago ⁓ where we took, we had about 45 or 50 people that came in. Again, you have an idea for a business, that's the only requirement. On a Friday night, we taught them these tools. At that time, we used Lovable as just one to use. ⁓ Saturday, they built. And then Sunday, those that wanted to present what they come up with could present. I think we had 35 presented fully functioning software applications in a day and a half. Wow. Who had never built software before? So I sat through those presentations and I was like, this is unbelievable. So that just showed me that, you know, that was just a weekend. if people with no experience could do that in a weekend, people that have been at it for a while in a couple of months can really do a lot. So the speed is one thing. ⁓ And then that translates into a lot of our startups today using Claude or lots of other stuff ⁓ to either build a new thing or to test new features. So to get to a prototype, a minimum viable product, get it to a customer. just get feedback or get it to some other people for feedback, you can do that literally in like a week. And so that's the speed that, ⁓ which used to take, if you didn't know how to build software, ⁓ you may hire an agency and it's a many month process and you've spent a lot of money. So that's changed the game quite a bit. speaker-2: So you brought up something, and I don't want to go too far away from this. But so these are like brand spanking new startups that you explained. How, if it's one or two people, could they get this in front of a customer? like what type of customer can speak to them? And like we know, we spend tons of money on marketing and salespeople just to get the meeting to give us a chance. How does that work with you guys that you're able to get people? speaker-0: conversation. speaker-2: get in front of people, I'll say this and I'll bring it up in a bigger picture at some point, with the Rochester community, I don't think does a wonderful job of helping the young startups around here and growth companies go in the larger companies that could be more helpful. are you utilizing them? How does that work? speaker-1: It's sort of utilizing the network. So one is a lot of times the people that go through these programs, ⁓ they identified a problem from some industry they were in. So they actually have some contacts. And so that's typically the easiest. It's like, built this thing and I know these five people that are in this space, let me go ask them. And then they're kind of friendly. So you get that sort of friendly. You're not having to go hunt them down and find them. ⁓ Secondly is our own networks. And so speaker-2: Okay. speaker-1: I'll use real estate again. have somebody that's building an app for kind of property managers to help manage contractors and projects and other stuff. And so there are a number of property managers that we know, right, that we made introductions to and they're always willing. One thing about Rochester is most people are very willing to take a call. They're like, happy to help. You're like happy to spend 20 or 30 minutes with somebody if you guys refer them and right. So it's a pretty open community from that standpoint. So for those initial customer, discovery kind of conversations, it's usually a friendly audience. ⁓ The business community, we have, we just talked about this again, we're doing strategic planning about how do we get the broader business community involved in the startup activity, to your point. ⁓ We lament the fact that when you go to Boston and other places, you see on their walls of the incubators, Google and Amazon, and like their corporate partners are there, on site, they're working with companies, they're like, hey, I have this new idea for, ⁓ you know, product for Amazon. Okay, let me get you to the person at Amazon that runs that business and we'll get your feedback. So we would love to see ⁓ some way to get better corporate connectivity to the startup activity that's happening here in town. speaker-2: 100 % with you. mean, and I obviously we're deep into AI and I see there are certain levels of AI that are just, they're done already. There's not going to be a ton of new LLMs. There's not going to be a lot of new Navidias at that layer and definitely the Micron and Fab level. There's only so many companies. But the application layer, there could be millions of companies that do wonderful. And we do have Vertex in Rochester. So why wouldn't someone come up with? some great AI software for grocery stores and be able to have Wegmans help out, build it and be the first customer and evangelize it to get it out nationally. And I just don't see that happening right now, but I think that Rochester does have enough large anchor companies that you could do that. And one of the first things you said was, you know, early to growth stage companies should be the ones. having the majority of the employees and the employees growing with them. And I'd love to see Rochester get there. ⁓ But we don't see, oddly enough, we don't see that many AI companies even popping up in Rochester, which has been disappointing. ⁓ But hopefully with people like you and organizations like you, that can change. speaker-1: We'll count you in. ⁓ But we definitely need to do more of that and you're right. There's the Weapons of the World, Paychex of the World, Constellation Brands of the World. There are plenty of companies with international or at least national. speaker-0: in. speaker-2: You're talking construction, you Pike, have Chase. speaker-1: All right, pretty you can do focus groups around. What do you what's the biggest problem you guys have? Okay, I have a team that's gonna go to our build solutions in test them out if you like them try them speaker-2: Yep. That's a idea. speaker-0: Yeah, a good segue into the Rochester piece for sure. ⁓ And you've said before that Rochester doesn't want to be, want to stay the best kept secret. ⁓ Steve talked about this a little bit, but what do you think like needs to change? Obviously bigger connections between the larger companies and the startups. But is there anything else that you think would be like low hanging fruit to get the ball rolling on that more? speaker-1: I don't think there's like a silver bullet. know, we searched for that for a while. ⁓ But I think we are getting the word out ⁓ through some of these programs that we have, which are national or international. So, you know, we go to the Photonics West massive trade show for the optics field and people know who we are and what we're doing. in some of those industries, we're starting to become pretty well known. ⁓ I think... For sure, what will help is more wins, more success stories, some VCs that made a lot of money investing in Rochester companies. All that stuff will contribute. ⁓ And then actually telling those stories. So we do have companies that have raised a bunch of money, they've had success, but ⁓ the stories aren't really getting out there to the right audiences, I don't think. So we have to figure out how we can amplify that a little bit more. speaker-2: How do you guys go about building the relationships with VCs and private equities and all that? And how difficult is that? I'm sure you have to use a pretty big network. And how many people in Rochester really know that world? speaker-1: Not a ton know that world, probably. ⁓ And we build it, again, the programs that we run that are industry vertical optics or energy or other stuff, those are pretty easy. We have big networks of VCs and investors, hundreds of them in our network. ⁓ When you look at companies that are sort of local companies, there are not a lot of local VCs, handful. ⁓ And so, broader kind of VC network. There's VCs in New York. We still think it's easier to find VCs in New York and Boston that'll invest here versus California. That's just been very difficult unless you have a personal relationship to get them interested. speaker-0: ⁓ I'll take us in a little bit of a different direction, but obviously you're heavily involved in the community with serving on boards and investment communities across the region. where do you see the biggest opportunity right now for Rochester's innovation, Rochester Innovation Economy? That was a hard one to get out. speaker-1: Say that three times. I still think the biggest opportunity is for the broader community to really focus on and help support the growth of early stage companies. Whether that's, hey, universities put a little bit of endowment into a venture capital fund to invest in local companies, hey, other local businesses commit to a few hours a month at a round table to give feedback to some startups that are interested in your space. I think if we can kind of force multiply, what's the engine that's kind of already underway and happening and now pull the broader community in, that would be great. If I think about everyone that's around the table at the ⁓ Regional Economic Development Council, or even, you know, we mentioned kind of the one rock board or some of the other boards of the economic development organizations who really don't have any involvement with the startup sector at all or an entrepreneurship sector, getting the broader community more aware of and engaged in, I think, would be a huge opportunity. speaker-2: Something you brought up that is, think, I would hope people are talking about it, but you have U of R and RIT, tons of talent coming out of there and tons of talent that have been there. So why wouldn't they kind of put together something, an endowment or something to get this going? Has that ever been talked about? Has that ever been broached? I mean, we hear all the time that talent leaves Rochester out of those schools. And sometimes we end up getting them back, just like your story, I have a similar story, but not all the time, probably mostly don't. ⁓ So has that ever been broached? speaker-1: So a couple parts of that have been broached. One, put some money from your endowment into a venture capital fund. ⁓ No one has had success yet doing that. ⁓ The endowments are typically measured by ROI. And so ⁓ they do invest in venture capital funds, but a lot of them will say, our requirement is you have to be a top quartile performing VC with at least multiple funds history. So they're never going to invest in a brand new fund out of the speaker-2: So the RIT and U of R are probably investing in the Sequoia. speaker-1: Absolutely. ⁓ As far as how do we keep the students here, ⁓ we've been trying to do that by connecting them to startups. So for example, one of the programs we had over a summer, we had 20 interns from RIT and 20 from U of R ⁓ in a pool where we almost had like a gig board, a project board, like, hey, this startup needs this done and these three students work on it. So we think that getting them exposed to the fact that there are some amazing tech companies here and startup companies here might help some of them stay because it's the least risky period of time in their careers when they don't have houses and mortgages and anything else. And so if we could get them to stay here because they had exposure to a startup company while they were here, we think that's a good way to do it. So we want to actually expand that. We've got a lot of interest from ⁓ St. John Fisher to do something this summer. And I think the other colleges would love it too. That's, they want to get their students involved and engaged and find some employment. And so we think there's an opportunity there. speaker-0: Great. Very cool. Okay. As I start to wrap us up, ⁓ if you were sitting here five years from now, what would you hope people are saying about Rochester's tech and startup ecosystem? speaker-1: Hopefully they're saying like, this is the best place outside of Silicon Valley for creating innovation and entrepreneurship. Where did Rochester come from? We hope that's sort of what they're saying, what they're thinking. Like if you have an idea and you want to start a company and you want to build a business and our secret weapon is have a great quality of life and a relatively affordable place to live, this is the place to do it. speaker-2: Great talent too, coming out of these. speaker-1: Absolutely amazing speaker-0: Yeah, we've talked about it many times on this podcast. speaker-2: Yep, I think that's common theme is from a lot of our guests is Rochester's quietly has a ton of potential. And now it's time to just go out and take it. speaker-1: Yeah, and we keep winning things. The Tech Hub's a good example. ⁓ Some of the other programs and things that we've gotten as a community are good examples. We had an NSF Stellar Engine visit a week ago, which is another $150 million tech hub focused on laser technology. we're in the finals for lot of these things and we're winning some of them, which I think goes to your point of people are starting to recognize the talent and the experience here. speaker-2: ⁓ One last thing. This is near and dear to my heart as a company developing software and AI. And it's frustrating that New York isn't pushing it, but it deeply affects the startup world. And that's the R &D tax credits ⁓ that in New York we have to amortize over five years. So if you're not funded, it can literally wipe you out for a startup. Do you know much about it? Has it affected these startups? speaker-1: ⁓ so it used to be right that in the year you have the expense, you can get the credit, right? And they changed it to amortize it over five years. speaker-2: years. So it was killing really young people who weren't fun, young companies that weren't fun that year. speaker-1: So, my opinion is that obviously for particularly startup companies, if they had the old rules where you could have the tax credit in the year of the expenditures, ⁓ obviously that's the best for startup companies because they get the advantage for it right away. They don't have the cash flow to float it over multiple years. Exactly. So it would be great if sort of that language could revert to the way it used to be. speaker-2: I think it hurts innovation. speaker-0: For sure. All right. Anything else before? speaker-2: No, this is great. I love talking about this stuff. There's not that many people in Rochester that know it in depth like you do. speaker-0: to live it every day. Yeah, awesome. All right. So Jim, are there any initiatives or programs at NextCore or Rochester Angel Network that you'd like to share about with our listeners? speaker-1: Bye! ⁓ I'll point everyone to our website, nextcore.org, which always has kind of the up and coming things. So every month we have a lunch and learn. It's open to the public on various topics, but we probably will be running another AI startup jam, startup weekend ⁓ in the not too distant future. ⁓ And then I always invite people to go to the Luminate Accelerator Finals event, which is probably going to be in the fall, September timeframe. But that's hundreds of people. We have investors. We have people from all over the world kind of here in Rochester. And it's just a great event. So put those couple on people's radar. speaker-2: If someone was interested to participate in the startup jam, how would they go about that? Or do you do the recruiting? speaker-1: ⁓ We will put out kind of an open call and people will just apply on the website and sign up for it really. pretty straightforward because we have very wide aperture, but who can participate? speaker-0: Awesome. Okay, very cool. Thanks for sharing, Jim. ⁓ For our listeners, if you would like to connect with Jim and follow his work, you can connect with him on LinkedIn under James Sinal. That's S-E-N-A-L-L. And like Jim called out, websites include nextcore.org, N-E-X-T-C-O-R-P-S.org, and RochesterAngels.com for the Rochester Angel Network. Jim, thanks for joining us on the Will MacWire. It's been a pleasure. speaker-1: Thank you for having me. speaker-2: Thanks, Jim. That was great. speaker-0: Thank you for listening to the WillMac Wire. If you liked today's conversation, make sure to subscribe wherever you get your podcasts or watch full episodes on our YouTube channel. You can also learn more about WillMac technologies and our work in customer interaction technology at willmactech.com. We'll be back soon with more conversations with the drivers, those shaping our industry and those building right here in Western New York. See you next time.