43North winner delinquent on loan

Four years ago, local manufacturing startup ASi was riding high, the first ever $1 million prize winner of the state-funded 43North business plan competition.

Now, the company is in financial trouble.

It’s not currently operational, has just one employee – the founder and CEO – and recently defaulted on a $250,000 loan from the Erie County Industrial Development Agency.

In exchange for the prize money, 43North takes a 5 percent stake in each winning company. 43North officials say the struggles of one company, even a winner of the $1 million – the largest prize offered – don’t reflect the track record of the competition’s broader portfolio of winners.

“We’re in this for the long haul and we’re happy with the returns we’ve seen,” said Nate Benson, a spokesperson for 43North.

The IDA’s lending arm approved the $250,000 loan for ASi in 2015, under a federally-funded program for high-risk business loans. At the time, the company anticipated hiring 15 new employees.

The loan was restructured several times, in an effort to help the company stay afloat and ASi made just over $22,000 in payments, an IDA spokesperson said, adding that the company struggled after several contracts failed to materialize.

Finally, in early September, the IDA sent the company a letter warning that the loan was in default, and that the full amount had to be paid back. No payments have yet been made towards that, the IDA spokesperson said. The next step the IDA will take to collect on the debt is the liquidation of the company’s assets.

ASi currently owes $280,000, including interest and penalty fees.

Glenn Thomas, ASi’s founder and CEO, didn’t return phone calls seeking comment.

The collateral for the loan includes the company’s assets, as well as Thomas’s house, the IDA spokesperson said.

The IDA spokesperson said ASi is the only 43North winner to have received a loan, and that a default like this is unusual.

In the competition’s first two years, most of the out-of-town winners left Western New York once their mandatory year here was up. Organizers say they’ve tweaked the selection process to focus more on companies that will be a good fit for the region, are further along in their development, and more likely to stay.

Still, most startups eventually fail. The track record of any one company, organizers say, is less significant than the competition’s ultimate goal of creating a culture of entrepreneurship in the region.