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I commend Jim Senall and NextCorps for identifying critical entrepreneurship and innovation shortcomings in the “State of Innovation Report.” Smriti Jacob reported the substance of the report while adding meaningful context. This is a topic that has been the focus of my professional life for thirty years in Rochester, as Jim’s predecessor at what was then High Tech Rochester, and in Charlotte, NC since 2008.
The failure of Rochester community leadership to focus on innovation and entrepreneurship must be corrected to restore economic growth and opportunity. Initiatives to improve the lives of everyone in the community depend on a vibrant, growing, and profitable private sector.
The metro Rochester strengths (patents, SBIR/STTR funding) and the weaknesses (venture capital funding, high-growth startups) identified in the report are essentially unchanged from what we knew 25 years ago. Initiatives such as NextCorps (formerly HTR) and Excell have worked diligently and creatively. The scale of the problem exceeds their capacity to solve it.
I offer observations from my 30+ years in Rochester (Xerox, tech startups, and HTR) and 10+ years in the very different rapid growth environment in Charlotte.
First, patents are not innovation. Patents are one measure of invention and Rochester has always been a patent leader. They may enable innovation in the hands of an effective entrepreneur or established company. The report notes that Xerox received the most patents (569) during 2021-2025. If patents led directly to financial success, Xerox would be worth more than its paltry market capitalization of $454 million.
Innovation may be based on technology or business models or business processes. Rochester’s patent prowess illustrates one form of inventive capacity; it has little to do with business innovation.
Research, once a Rochester strength, has declined relative to other U.S. metros. Part of this is the reduced impact of 20th century research giants Kodak and Xerox. However, I was disturbed to find that the University of Rochester has not kept pace with U.S. higher education R&D expenditures. The National Science Foundation publishes annual R&D data for U.S. universities (known as HERD survey). In 2010, the UR reported $415 million which placed it in the top 50 universities. By 2024, the UR grew 16% to $492 million and ranked #73. I looked at 15 universities that were adjacent to UR in the 2010 rankings. If UR had grown at their 51% average, there would be at least an additional $100 million in R&D in Rochester in 2024.
The challenge of attracting venture capital is well-documented in the Innovation Report. VC funding is highly concentrated geographically and many metros, including Charlotte, have similar concerns. There is not a simple answer, but one controllable response is a strong local angel funding effort.
VC funding is critical for many high-growth ventures, but it is not the only path to rapid growth. Inc. magazine publishes an annual ranking (by revenue) of 5000 fastest-growing private companies. This is one measure of the strength of the metro entrepreneurial ecosystem. My brief look at metro Rochester performance suggests the trend is negative. In 2016-2020, Rochester averaged 16 Inc. 5000 companies annually; this declined to 7 per year in 2021-2025.
The most important factor for entrepreneurship and innovation success is, of course, human talent. My experience is that the people who can build a rapidly scalable business and who can take inventions from lab to the market are scarce. The Innovation Report includes good ideas on how to address this including concepts that we piloted on a small scale at HTR in the early 2000s.
It is a challenge to attract that talent since there are compelling reasons to pursue high-growth entrepreneurship in established hot spots (San Francisco Bay, New York, Boston, Austin, others). Rochester has positive quality of life factors. But, that is not enough. Rochester has many of the high taxes and heavy regulation of New York City but without the density and network effects.
The U.S. economy has changed dramatically, and an effective Rochester entrepreneurship and innovation strategy must begin with a clear-eyed assessment of strengths and challenges. Consider these statistics. Monroe County had 712,000 residents in the 1970s and today has about 750,000. Mecklenburg County NC (Charlotte) was home to 377,000 in the 1970s and now is much bigger than Monroe with 1.2 million. In 1974, Monroe’s per capita personal income of $6,763 exceeded Mecklenburg’s $6,123. By 2024, Mecklenburg’s $86,098 was far ahead of Monroe’s $67,184. Rochester becomes less important and less visible as it falls behind the country’s growth metros.Paul Wetenhall
As we arrive in Rochester for next week’s Jazz Festival, we will be reminded of the community’s many positives. The clock is running out for Rochester to restore growth to its economy. I am saddened that innovation and entrepreneurship strategies have not yet become the guiding principle for Rochester’s future growth.
Paul Wetenhall
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