Two investor networks that have backed numerous startups in Buffalo are set to pool their resources.
The group will invest through a newly created entity, S2 Venture Partners, led by local business executives Ron Faso and John Baldo.
The networks:
• Faso and Baldo’s network, which has been investing in startups for eight years through S1 Associates. That group, which has grown to about 30 people, has backed companies such as ACV Auctions, PostProcess Technologies, Circuit Clinical, Thimble, Verivend, CleanFiber, Viridi Parente and Azuna Fresh.
• A group led by Charles Lannon, who has led investments into such companies as Athenex, PostProcess and Circuit Clinical. In each of those deals, Lannon formed LLCs and invited his network to take part in the deals.
Lannon now lives in Florida and has been looking for a way to pass the baton. He met Faso through companies they were both backing.
Faso started his career as a certified public account at Deloitte, later co-founded recruiting firm SelectOne and is now director of business development at Andreozzi Bluestein law firm.
“I wanted to make sure my investor base doesn’t evaporate simply because I’m not putting together LLCs anymore,” Lannon said. “Ron is someone who I’ve become very comfortable with. He’s a CPA by training who knows how to do due diligence and is already working with a core group of investors.”
Lannon was among four co-founders of Sovran Self Storage (now called Life Storage). It became a publicly traded firm headquartered in Williamsville and one of the nation’s largest self-storage corporations. Many of the initial investors in that company stayed with him through the years, leading to the deals in local startups.
With a larger network to bring deals forward and then invest in them, S2 leaders plan to be a forceful entity in advancing tech startups in Buffalo.
“We want to help local companies grow in Buffalo and help our investors make lots of money in the process,” Faso said.
Austin Kelly of the BlackOak Group and Harold Erbacher, chief operating officer of Northtown Automotive Cos., will serve as S2 advisers.
S1’s initial group included Faso, Baldo, Paul Cody, Sam Russo, Kevin Kerl and Ryan Kagels before expanding over the years.
Crafted by deals attorney Christian Henrich, a partner at Woods Oviatt Gilman, S2 was built to accommodate the breadth and complexity of a larger group of investors. Instead of forming a separate LLC for each deal, the entity will be able to create different share classes. Its network of investors can decide, deal by deal, whether they’d like to participate.
They’re about to get their first chance: S2 is set to become one of the investors in Egret, a project that seeks to support medical device startups on the Buffalo Niagara Medical Campus.
Lannon will remain a PostProcess board member, a Circuit Clinical board observer and a director of Rochester-based Royal Oak Realty Trust.
But when people call Lannon with an idea now? He’ll have a stock answer.
“Anyone who comes to me with a new idea, I’ll say, ‘Hey, let me put you in touch with Ron,’ ” Lannon said. ‘Depending on how that goes, I might invest through S2.”
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