The chance to win seven figures worth of funding has persuaded a Richmond startup to migrate north for the winter.
Painless1099, a local company that helps freelancers manage their taxes, is one of 11 finalists in 43North, a startup competition run by a company of the same name in Buffalo, New York.
The contest, which promises each finalist at least $250,000, comes with two conditions: 43North gets a 5 percent equity stake in each startup and the companies must each base their operations out of Buffalo for 12 months.
On Oct. 29, Painless1099 and its fellow finalists will pitch to a seven-judge panel for the chance to win up to $1 million. Four companies will win $250,000, six companies will win $500,000 and one company will win the grand prize of $1 million.
“We’re shooting for a million, obviously,” said Ace Callwood, a Painless1099 co-founder.
A prominent face among Richmond’s startup crowd, the four-person company is based in the offices of INM United in Scott’s Addition and was named in September to Lighthouse Labs, a business mentorship program that comes with $20,000 in funding.
Callwood said the move to Buffalo will take place in December or January. He said it hasn’t been decided whether Painless1099’s new, chillier environs will become a permanent home.
“The big takeaway here is that we’re expanding the network,” Callwood said. “It’s our job to build a great company.”
Callwood launched Painless1099 earlier this year with Justin Kauszler and Matt Russo. Callwood and Kauszler were also behind Coffitivity, a website and app that plays the sounds of a coffee shop for people looking for background noise while they work. Russo built Coffitivity’s mobile application.
Painless1099 helps independent contractors like graphic designers and real estate agents save money for tax season. The company automatically separates funds for taxes each time a user gets paid and puts what’s left into that freelancer’s personal checking account. Painless1099 makes its money off fees.
Callwood said funding for Painless1099 would go toward fine-tuning the company’s online presence, as well as things like advertising.
“The biggest piece is human capital,” Callwood said. “Legal is always a big one.”
In addition to the decision of the judges, a people’s choice award worth $10,000 will be handed out on the evening of the 43North competition. Callwood, who is Painless1099’s pitchman, said the key to a good presentation is keeping it casual.
“It’s having a conversation,” he said. “I think too often we get into this pitch mode that’s almost too robotic.”
The funding from 43North will be doled out throughout the year, during which finalists will have access to free office space and business mentorship.
About 11,000 companies from around the world applied to 43North this year – the competition’s only caveat is that companies not be in brick-and-mortar retail or the hospitality industry.
“We’re looking for companies that really have the chance to scale aggressively and grow over a short period of time,” 43North spokesman Peter Burakowski said.
In its second year, 43North is giving out a total $5 million this week. The competition is part of the Buffalo Billion Initiative, a $1 billion commitment to Buffalo from New York Gov. Andrew Cuomo to help grow the economy in that part of the state. 43North gets its funding from the New York Power Authority, Empire State Development, and various sponsors.
Painless1099 is the only 43North finalist that hails from Virginia. Other finalists this year came from New York, Massachusetts, Israel and Canada, and work in computer services, healthcare, biotechnology, consumer products, e-commerce, agriculture, and education. The competition will be held again next year.