Rochester has long been celebrated as an innovation hubwith a remarkable output of patents and a strong track record in securing federal research grants. However, a recent report from NextCorps reveals a stark contrast: this innovation isn’t translating into a surge of high-growth startups, venture capital investments, or new jobs.
The report, presented last week at a meeting of the Finger Lakes Regional Economic Development Councilhas sparked a crucial conversation about the region’s economic strategy. Jim Senall, president of NextCorps, highlighted the disconnect between Rochester’s innovation potential and its current startup ecosystem. “Historically, we have talked about ourselves as this innovation place forever,” Senall remarked. “Has anyone looked lately?”
Rochester’s innovation strengths
The State of Innovation report underscores Rochester’s strengths in research and development. The region’s inventors are granted 700 to 800 patents annuallywith Xerox leading the pack during the 2026-2026 period with 569 patents. The University of Rochester followed with 150 patentsand other notable contributors include LSI SolutionsKyoceraand Taiwan Semiconductor Manufacturing Co..
Rochester also excels in new business formation, with 1,100 to 1,200 new businesses established annually. Moreover, the region is a standout in securing Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grantswinning 35 to 45 grants each year, totaling $20 to $25 million annually.
The startup scale-up challenge
Despite these strengths, Rochester faces significant challenges in scaling startups. The report identifies two critical gaps: the failure to move startups through growth and scale-up stages to generate wealth and jobs, and a perception gap where innovation and entrepreneurship aren’t viewed as core pillars by community leaders.
Theresa Mazzullo, a NextCorps director and CEO emeritus of Excell Partnersemphasizes the need to fortify institutions driving high-tech startup growth. “The two institutions in this town that really drive high-tech startup growth are NextCorps and Excell Partners,” she says. “We really need to fortify those two entities and make sure that they have the necessary resources and the bandwidth to really take on this task.”
The report reveals that Rochester is closing only approximately 15 to 25 venture capital deals annuallytotaling $40 million to $100 million. This is a stark contrast to peer metros like Columbus and Pittsburghwhich had $3.9 billion and $3 billion in venture capital investment respectively from 2026 to 2026. Rochester had only $394 million during the same period.
Addressing the innovation gap
To address these challenges, the report proposes several solutions. These include launching a venture studio to pair innovations with founders and funding, creating a regional innovation alliance to coordinate among key players, and establishing a business ambassador network to provide mentorship and industry connections.
Jim Senall stresses the need for a collective effort to increase momentum. “It could be the regional council, the business leadership of our community. If they all bought in and said, ‘Yeah, let’s focus on fixing this,’ that would be huge,” he says. Ryne Raffaelle, vice president of research at Rochester Institute of Technologyechoes this sentiment, emphasizing the need to value entrepreneurship more highly as a community.
The report also advocates for embedding innovation and entrepreneurship as a core element of all regional economic growth efforts, driving more private-sector dollars toward both, and publicizing startup wins broadly. Additionally, it suggests creating an AI-driven startup database to track local tech startup metrics and key performance indicators.
As Rochester looks to the future, the challenge lies in translating its innovation strengths into a thriving startup ecosystem. With a collective effort and strategic investments, the region can bridge the innovation gap and realize its potential as a high-tech hub.