Richard E. Honen Discusses the Role of Gaming among Startups

Gaming plays a growing role among “Tech Valley” startups

Albany

Those video games your 15-year-old is playing may not be so worthless, after all.

The Capital Region has earned its “Tech Valley” moniker by fostering a healthy growth ecosystem for start-ups. Increasingly, those start-ups are game development studios, according to a local entrepreneurial and venture capital expert.

Rich Honen, a partner at the Phillips Lytle LLP firm, detailed the Capital Region’s tech startup landscape, and what needs to happen to maintain the growth the industry has experienced, during the monthly Albany Roundtable meeting held Thursday afternoon at the University Club of Albany.

Honen pointed to non-profit organizations like Fuzehub, Innovate 518 and the Center for Economic Growth, among others, that have helped support startup companies, as well as the hefty investments the region’s universities and colleges have made into technological research and development.

“The Capital Region is actually doing very well, and it’s because of this one word: ecosystem,” Honen said. “It’s something we do very well in the Capital Region, better than many other regions. The ecosystem just means different communities of people working together to promote entrepreneurship.”

Recently released data from the Center for Economic Growth showed the Capital Region is home to 21 video game development studios that employ 418 people.

The region’s gaming cluster includes prominent studios like Vicarious Visions and PUBG Mad Glory, which have helped develop popular games like Guitar Hero III: Legends of Rock and, more recently, PlayerUnknown’s Battlegrounds.

Honen said the “real strength of the Capital Region” is the collaborative nature of its local companies.

He pointed to the sale of Autotask corporation, which was originally founded by two local entrepreneurs. The company’s sale then funded the development of Eastern New York Angels, a group of Capital Region investors, which went on to fund Vital Vio, a start-up founded by Colleen Costello, an RPI graduate.

“You can see the connectivity there, the lack of turf problems. It is something I see here,” Honen said. “I don’t see that as much in Silicon Valley.”

But there’s still room for improvement, Honen said.

Typically, public funding for start-up tech companies is tied to job creation. In the case of GlobalFoundries, the state provided $1.2 billion in incentives for the chip fab plant with the guarantee it would create around 1,200 new jobs in the region.

But Honen said the state should tie public funding not to job creation but rather to things like technological development benchmarks, or to a sales goal.

“You can’t necessarily tie this to jobs right away; this is early-stage stuff. You’re just trying to make something work, trying to see if something has a chance of working,” he said.

He also called for better information sharing between the region’s higher education institutions and local entrepreneurs.

“With the academic research, it’s great we’re doing that, but a lot of that research, due to…some parts of the academic culture, a lot of that research stays locked up in the universities. We’re having trouble dribbling it out to entrepreneurs,” Honen said.

“We can probably push our friends — and they are our friends — at the universities to maybe give out this technology a little bit quicker,” he said.

Honen said technological innovation in the Capital Region is likely to continue, but in a different way than it has in recent years.

He said that, in addition to gaming, virtual reality technologies with medical or military applications could drive regional startup growth — though the days of large technology and manufacturing-fueled job growth, like GlobalFoundries provided, are not likely to continue.

“It’ll be different,” Honen said of the technology industry in the region moving forward. “I don’t know that we’re going to produce 1,000 jobs. Most technology isn’t meant to produce 1,000 jobs anymore. That’s the problem.”