Attention Venture Capitalists, it’s time to setup shop in Arizona!
Arizona is a few exists away from being in the startup ranks of Austin, Silicon Beach, and DC to name a few; but we still are missing two critical factors: more active venture capital firms and advertising our success.
Last winter I saw Mark Rowland CEO of DTP Ventures speak about the “essential building blocks of a startup-friendly community” and his experience with the Downtown Project in Las Vegas. Rowland spoke about nine essential components of a successful startup ecosystem: leaders, venues, mentors, events, startups, corporations, government, investors and universities. Arizona checks the boxes on almost all of the components Rowland spoke about.
Leaders: You can’t start a revolution without leaders to see it through. Arizona has committed leaders and groups that have helped push Arizona’s startup ecosystem forward. Instead of naming individuals, just look at the groups that have formed and helped along the way: Arizona Commerce Authority, Arizona Tech Council, and now the #yesphx movement. These groups regularly host workshops, networking events, and venture competitions for the entrepreneurial community.
Venues: You need comfortable places for entrepreneurs to work and meet. There are 42 co-working spaces in Arizona. 30 just in Phoenix such as Co+Hoots, Deskhub, The Office Pile, and Gangplank. Not to mention the support of large restaurant groups like Fox Restaurant Concepts The Henry that wants you to “Think of it as an extension of your own home and office.”
Mentors: To grow we must educate and share our experience and knowledge with others. There is no shortage of mentorship opportunities. There are 28 incubators/accelerators in Arizona all with large lists of mentors.
Events: Without regular coordinated events, the revolution can lose steam. Thanks to a number of groups Arizona has a thriving series of events around the state. I haven’t confirmed, but Ive been told you can attend an event almost every day of the week. The #yesphx events regularly have 200-300 attendees each month, the Arizona Tech Council hosts monthly Lunch & Learns, and Startup Grind Phoenix has regular talks- and that is just to name a few add in the co-working and accelerator events and we have a busy calendar!
Startups: You can’t have a startup scene without startups! If some of the local venture competitions are an indicator, we have plenty. The most recent Arizona Innovation Challenge had 135 applicants, the Venture Madness Competition had over 100. We also have plenty of success stories such as Lifelock, Infusionsoft, WebPT, and StatDoctors. That said, Arizona startups could do a better job advertising their success. Unless people know about the success happening here we won’t attract the active capital we need.
Corporations: It takes money to get off the ground, and the sponsorship and support from corporations is important. Fortunately, companies like Ernst & Young, Salt River Project, SRP, Bank of America, and Silicon Valley Bank are regular sponsors of events. Beyond the financial support, big corporations bring smart people, in particular technical people, to the local scene and having companies such as GoDaddy, Intel, Raytheon, and Honeywell helps keep technical people in our state. Let’s not forget that Arizona has one of the largest healthcare industries in the country with some of the best doctors and hospitals in the country. Not a bad mix of tech and healthcare, especially when you look at the importance of healthcare innovation in this country.
Government: Arizona is a business friendly state. It has one of the lowest costs of doing business in the United States: low taxes, simplified tax system, and streamlined regulation. It is also a great place to live ranking No. 8 among big cities for affordable living.
Universities: Arizona is also home to two major research Universities; Arizona State University and University of Arizona which has recently been in the news for its partnership with Uber. Silicon Valley knows there is great talent in the state, the state ranks 3rd in the top sources of imported talent in Silicon Valley.
Investors: Now this is the conundrum we face in Arizona. There are very few established Venture Capital firms in Arizona. Arizona has no shortage of wealthy individuals, though the majority of their alternative investments are in Real Estate. Yes, we have one of the most active angel groups, Desert Angels which ranked third in the nation for activity last year and Silicon Valley Bank has also bet heavily on Arizona, but we still need more organized capital.
Until Arizona has 5-10 venture capital firms that can work together to co-invest on deals from seed stage to series A and beyond, our talent and our innovation is going to have to go to where the money is… and where it is there is a large amount of competition for deals on both sides of the fence. As an Investor I would prefer to be where the value is and Arizona by all indications has tremendous value.
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