Tech start-ups seek the good life in Saratoga Springs

by Will Brunelle

Published by Capital New York on December 2, 2014

SARATOGA SPRINGS—A picturesque part of the Capital region long known for horse racing and tourism is now home, too, to a burgeoning tech scene.

For now, this scene consists of small start-ups, doing things like developing video games and inventing workflow software. But unlike some of the other start-up clusters that have come together north of New York City, this one came together without any need for incentives for the local or state government.

The primary reason for that, these entrepreneurs and their boosters say, is a simple one: quality of life.

"We have a really cosmopolitan city,” said Chris Thompson, founder of start-up and creator of the “Sharatoga” co-working space.

Citing the fact that Saratoga Springs has the second highest person-to-restaurant ratio in the country, behind only San Francisco, Thompson argues that if it weren't such an attractive town, it likely wouldn’t have a tech community at all.

People want to be there as they work on the start-ups, he said, and find a way to make it plausible.

“What you have is a lot of freelancers who have lined up steady enough gigs,” Thompson said.

He estimated that there were 12 tech start-ups in Saratoga Springs, not counting dozens of Saratoga-based tech workers that don't have local work at all, but telecommute to paying gigs for companies based elsewhere.

“You have all the same components in a software company [as in a manufacturing company], but the people can work from anywhere,” Thompson said.

F. Michael Tucker, president of the Center for Economic Growth, a regional business-boosting organization, thinks the trend of tech workers working in the Saratoga Springs area is reaching a sort of critical mass, as creative types seek each other out.

”I’m not particularly surprised [that] you’re observing a flourish of activity,” Tucker said of Saratoga Springs, calling it a “creative economy concept.”

”The evidence of success is that these companies are, if not in the same building, starting to pop up in the same part of the region together,” Tucker said.

Stephen Wilcox, the head of interactive development for Fingerpaint Marketing, a firm with a strong Saratoga presence, mentioned the internet-company bust of the late 90’s and early 2000’s, and said it hit neighboring city Troy hard.

But since then, he said, “there’s been a renewed kind of interest” in software start-ups.

The distributive work model, where employees complete their work from home or at a remote office, has helped the industry regain its momentum.

“People that are talented and people who want a certain quality of life can choose to live [here] and choose to work for great companies,” he said.

The tech-friendly atmosphere of Saratoga Springs is also helped by its close proximity to multiple universities, including SUNY Polytechnic Institute's College of Nanoscale Science and Engineering and SUNY Albany in Albany, and Rensselaer Polytechnic Institute across the river in Troy. SUNY Albany boasts a newly completed School of Business, which houses cybersecurity and tech management programs. CNSE is home to dozens of high-tech companies, who share their laboratory and fabrication spaces with students and researchers at the school.

R.P.I. has taken a more active role in encouraging entrepreneurship, especially with the development of their Emerging Ventures Ecosystem (EVE) program and the Severino Center for Technological Entrepreneurship. The Center hosts monthly events called "Startup Tech Valley," which invite both students and local businessmen and women to present their startup companies to a room full of mentors and investors.

EVE helps to incubate small tech businesses that begin with student research, in areas that the university's research staff already have a strong background in.

Wilcox and Thompson, along with Todd Shimkus, president of the Saratoga Chamber of Commerce, have worked hard to foster a sense of community between what Thompson calls the “islands” of individual companies.

Wilcox started the Saratoga TechOut event, which works as a mixer for local tech employees looking to mingle in a happy hour-esque setting. Thompson started the Sharatoga Tech Talks, where he invites individuals to give presentations either on their own work or their insights into the tech community. And Shimkus is responsible for Thompson’s formation of the co-working space, having initiated connections between dozens of telecommuters two years ago in an attempt to have them share successful remote working techniques.

The chamber ultimately could not cost-effectively manage a coworking space, so Thompson shouldered the burden himself and opened Sharatoga in the center of downtown Saratoga Springs. He operates his start-up, the electronic work-order ticketing application, from an office in the space.

Despite its long-touted focus on growing jobs and engaging the high-tech industries that are growing in New York, the state government has done little to boost Saratoga’s growth. Shimkus and Thompson were both unaware of any collaboration with the state in companies’ choices to locate in Saratoga, and so far no major local start-ups have partnered with the state’s numerous incentive programs.

The state’s major economic development efforts have largely targeted manufacturing companies like Malta-based GlobalFoundries, and companies willing to become research partners with SUNY Polytechnic Institute. But that doesn’t preclude software companies from finding a place in the state’s programs, according to Jason Conwall, spokesman for the Empire State Development’s Start-UP NY program.

“We can’t help businesses unless we know they need help,” Conwall said. He said that the state is always looking for opportunities to help out because “so many companies can do what they do from anywhere,” and they want to ensure that those companies don’t leave New York.

“We want to have companies that are here, and we also want to attract other companies to come here. It all starts with being aware of the company and what they’re doing,” Conwall said.

As of early October, Start-UP NY boasted 25 participating companies, with a promise of 742 jobs to be created and $63.1 million in investments.

Saratoga-area companies face challenges in proving that they’re worth that kind of cash, or can generate those kinds of numbers, however. Many have yet to report revenue, and few have staffs that number in the double-digits. Most are one to five person enterprises that are still seeking seed funding and venture capital; they don’t need the massive corporate spaces and tax breaks that the major companies seeking membership in Start-UP NY do.

Arguably the biggest member of Saratoga Springs' tech sector, Mad Glory, employs under 20 people in its local office. The company hosts the LevelUp conference, which draws out gaming and software development workers to give presentations on their work and how to grow as an industry member or company.

The local companies are not big enough, or don’t generate enough revenue, to qualify for most Empire State Development programs, including Start-UP. That program focuses on job creation and retention, and these small companies that are largely seeking seed-level funding aren’t at a level that the program is interested in.

Conwall said, however, that simply being a software company doesn’t hinder a start-up’s chance at state assistance. “I feel like a lot of the Start-UP companies we’ve announced—overall, I feel like most of them are software,” Conwall said.

Liazon Corporation, a massive company devoted to creating benefits exchange websites for employers, promised to create 500 jobs and invest $5 million in a new Buffalo location, in exchange for being granted access to the tax breaks of Start-UP NY.

Wilcox agreed with Conwall, and said that state aid is something that will come with time, and that the blame falls not only on the state for missing opportunities but on the companies themselves for not looking hard enough for ways to grab state incentives.

“From a state level, I do agree that they’re going for more bang for their buck, but there are other programs like Start-UP NY that could be used by software companies to get a boost. I think Saratoga has not taken advantage of using Empire State [College] as a sponsor, to do a start-up or incubator."

Thompson said that the entire community is responsible for ensuring its own growth, and for giving each other reasons to want to stay in Saratoga. “I don’t see companies leaving, I see people leaving,” he said. The key is to give area tech workers “a sense of ownership” of the community, which is accomplished by expanding their networking opportunities.

“The community that grows out of these meetups—I think that’s invaluable in giving people a sense of purpose,” Thompson said.

Sam Gonzalez, founder of a start-up service called Cinch Menswear, said that he wants to keep his company in Saratoga but has had trouble finding anyone to invest, including state opportunities.

“A lot of incubators and investors are in New York City,” Gonzalez said, bemoaning a lack of state offerings for software-centric entities like his company. “A lot of the help out there is for hardware companies,” he said.

Tucker said that the trouble that entrepreneurs like Gonzalez face “may mean [that] the economic development community needs to do a better job identifying what they can do for these companies.”

Tucker said that one of the problems may also be that many investment and grant programs are “based on owning property and making capital investment,” and that the software-centric companies in Saratoga involve “intellectual capital” more often than they involve “bricks and mortar” development.

”It may trigger us to take a closer look at how to perhaps develop additional incentive programs for companies that are developing and expanding intellectual capital, instead of buildings and equipment,” Tucker said.

But Gonzalez said that despite all that, “Saratoga’s a great place to start a business.” He called the networking events that have begun to spring up critical to new businesses’ success, and said he frequently attends in hopes of meeting a potential investor, and business mentor.

The result of the networking events and availability of space for start-ups and expanding ventures has been the establishment of a local tech scene that boasts strong membership and ties to its community, helping it retain jobs and provide opportunities for continued growth.

Wilcox called it the “best little tech scene anyone’s heard of,” and that there’s “something here.”

Shimkus attributes part of the Saratoga tech sector’s success to the region’s thoroughbred racing history.

“A significant percentage of our local community, we’re willing to take risks,” Shimkus said.

“That’s exactly the kind of atmosphere and culture you have to have in a community to attract what we’re seeing here: the emerging tech center.”