RECAP: UPSTATE CAPITAL’S 11TH ANNUAL SARATOGA FORUM
By Caitlin E. Moriarty
Upstate Capital Association of New York is a cornerstone organization in Upstate New York, having spent the past 15 years facilitating access to capital for companies and deal flow for investors. Each year, in Saratoga Springs at the Saratoga Forum, Upstate Capital assembles a dynamic group of investors, entrepreneurs, leaders, and professionals to discuss investment and economic trends and challenges, celebrate progress, and strategize how to continue moving the ball forward for companies and investors across the region.
#SARATOGAFORUM DAY 1
Guests of the 11th Annual Saratoga Forum arrive at the gorgeous Canfield Casino nestled right in downtown Saratoga Springs’ Congress Park. The bustling downtown area epitomizes the charm of many towns and cities we see across Upstate New York; gorgeous architecture, independent stores, proximity to educational institutions, and glimpses and explanations of its rich history.
Walking into the venue, guests are welcomed by a showcase of startups, some of whom gathered earlier in the day for an invitation-only Executive Forum with CEOs of established companies to discuss strategy, value maximization, and merger and acquisition best practices. Three of the showcasing companies – Imajion, who is providing mixed reality solutions for the construction industry, Precision Vision, whose real-time image processing technology is reimagining surveillance possibilities, and TruWeather Solutions, whose micro-weather SaaS solution is reducing uncertainty and risk for unmanned vehicle and fleet operations – are from The Tech Garden business incubator in Syracuse, New York. The remaining companies in the showcase hail from all across Upstate Kirsh Helmets and Gatherer’s Gourmet Granola from Schenectady, ADAMM Intelligent Asthma Monitoring from Rochester, Saratoga County Prosperity Partnership (SCPP), and 43North 2017 Winner Kangarootime from Buffalo. In addition to the showcase, there are refreshments, free professional headshots done by Laura Kozlowski Photography, tours of the Saratoga History Museum upstairs, and networking as the main ballroom fills.
Kicking off a series of brilliant speakers and engaging discussions for the afternoon, Upstate Capital Executive Director, Noa Simons, and Executive Committee Member, Brian Model, take the stage to welcome the audience and express gratitude to the sponsors and supporters who make the event possible. They then bring to the stage Jennifer Tegan of Cayuga Venture Fund, who facilitates a discussion on venture capital trends with Howard Morgan. Howard Morgan’s immense experience in the venture capital space includes his current role as Chairman of B Capital Group, and previous experience as co-founder and partner of First Round Capital. Up next is a panel discussion on private equity, moderated by Patricia Luscombe of Lincoln International, with Scott Baker of Oak Hill Capital, Randy Bianchi of Lakelet Capital, and Dave Helgerson of Hamilton Lane. Changing perspectives, highlighting a local company’s success,FirstLight Fiber’s Chief Information Officer Scott Gilbert shares how the company prepared for and benefited from private equity. To round out the afternoon, Frank McEvoy of New York State Common Retirement Fund shares his insights from the limited partner perspective.
Below are just a few key insights from the afternoon:
Upstate New York is considered a large, healthy, and stable market. However, traditionally underserved by investors, it is still a challenge to achieve thorough geographic coverage for an investor sourcing deals in our region. This leaves an opportunity for innovation to increase communications between prospective investments and investors seeking the right opportunities. Investors hope companies engage early and will pursue those deals where their firm can add value, the company has their due diligence in order, and there is a true purpose for a transaction.
East Coast startups have a harder time scaling because there is a more limited pool of entrepreneurship alumni – individuals growing and leaving successful startups to start or join another one. However, this pool of serial entrepreneurs is slowly growing on the East Coast.
International entrepreneurship is not as prevalent, with the exception of Israel, because startup failures come with a probation period before being allowed to try again, and a deeper shame tied more directly to identity and family than in the US. Needless to say this is highly dissuasive to building a culture of serial entrepreneurship and risk taking.
Young aspiring entrepreneurs should not romanticize the college dropout story, and should instead continue building their skills as they complete their educations.
It is currently more challenging for a company to go public as a result of decimal pricing, which was implemented in 2001. Decimal stock trading means the spread between the bid and asking price can be as small as one cent. This is opposed to the previous fractional method, which originally traded in eighths, or increments of 12.5 cents.
The underlying tone of each conversation reinforces just how far Upstate New York and the East Coast entrepreneurship ecosystem has come over the past decade. Transitioning to the dinner, drinks, and live music portion of the evening, guests use their Brella mobile app to review their personal schedules filled with 15 minute meetings that they have already “booked” to connect with fellow attendees. They enjoy the increased ease of networking while appreciating their drinks and delicious southern style dinner provided by Hattie’s, which has become a tradition at the event. Attendee Robin Gill of Silicon Valley Bank wins the raffle for a helicopter ride over the Capital District, which is scheduled for the following morning. As the day comes to a close, gift bags filled with locally sourced treats are distributed.
#SARATOGAFORUM DAY 2
Bright and early, attendees make their way to the Saratoga Race Course to watch hundreds of horses get their morning exercise on the tracks while enjoying a delicious buffet breakfast, bottomless cups of strong coffee, and morning conversation with fellow guests. Before the private suite opens, they take a tour of the stables, where enthusiastic locals share the history of the track and the complexities of housing up to 1,800 horses on premises. Many of the jockeys and horse exercisers are sure to say hello as tour takers can’t help but gawk at the gorgeous Thoroughbreds.
Making their way to the Whitney Suite, guests hear from Rich Honen who shares his experiences and the economics of owning race horses. He discusses the approximate $4K in monthly upkeep costs and the common practice of claiming horses where, up until 2 minutes before the race starts, one can simply go claim someone else’s race horse for a set price. He then humorously describes the approximate 8-minute due diligence process of picking race horses to the room of individuals who could spend months investigating the next addition to their investment portfolios.
For the final scheduled conversation of the event, Hugh Johnson of Hugh Johnson Advisors presents his own compilation of economic data, analysis and outlook. Below are some of the insights he shares:
- Although domestic liquidity conditions are negative (i.e. there is not enough growth in the money supply to drive both the economy and the markets), international capital flows have been strong and have offset the domestic liquidity shortfalls. This means we can perhaps live with negative domestic liquidity conditions for now.
- Returns are expected to decline as we move through 2019 and 2020. Equity market rates of return in negative liquidity conditions are about 1.9%, while in positive liquidity conditions are 14.3%.
- Overall, the US economy should continue to expand, but slow significantly in 2019 and 2020. In response to tighter labor market conditions resulting from slower population and workforce rates, employment should also continue to expand, but at a significantly slower pace.
- A global trade war with 25% tariffs might reduce the world GDP by 2-3% compared to trend. This would be less damaging than the global financial crisis or the Great Depression, but comparable to other downturns such as the 1973 oil shock or the early 1980’s recession.
- What the US should really be worried about is the increasing interest rates indicative of the Federal Reserve’s monetary and fiscal restraint. The current climate is reminiscent of 1982 and 1938-39 where we might see a rollback of the tax cuts, which have previously resulted in a 5% deficit of the GDP. The upcoming mid-term elections will decide how this plays out.
The remainder of the #SaratogaForum was spent placing bets on the day’s races, enjoying lunch, and continuing to converse and network before everybody makes their way home.
The setting, quality content, and impressive list of attendees were highly engaging and made for a truly exceptional event. If attendees of Upstate Capital’s 11th Annual Saratoga Forum could take away one insight from this event, it is that there is a dedicated group of individuals who are working tirelessly to make Upstate New York an innovation hub and the place to build businesses. Be sure to keep an eye on https://upstatecapital.org/ for more great events.
A NOTE OF THANKS
Big thanks to Hamilton Lane, Silicon Valley Bank, Stonehenge Growth Equity Partners, Phillips Lytle, and Cayuga Venture Fund for supporting this event. And more thanks to Upstate Capital’s annual sponsors who underwrite the organization throughout the year – NYSERDA, Nixon Peabody, Keybank, GENIUS NY, The Bonadio Group and ESD’s NY Ventures at the gold level, and regional support from Excell Partners, Saratoga County Prosperity Partnership and Center for Economic Growth.