Arizona to Become Top Five Technology-Driven U.S. Economy

TUCSON, ARIZONA – March 3, 2016 – A new report lays out a plan for propelling Arizona into a top-five U.S. destination for bioscience and technology-driven industries, bringing to $600 million total venture capital invested in local companies by 2025. The effort is key to growing new jobs in the state. Citing access to risk capital as essential to building the state’s innovation and technology economy, The Arizona Bioscience Board (ABB) released a comprehensive report, Risk Capital in Arizona: Observations and Recommendations to Accelerate the Growth of the State’s Innovation Economy, assessing the state’s competitiveness against other markets and providing recommendations and quantifiable goals. Nationally 70 percent of venture capital is disproportionately invested – and 75 percent managed by firms – located in California, Massachusetts and New York. In the California Bay Area, with just over 1 percent of the U.S. population, firms receive more than a third of total venture capital invested in all American companies. The ABB wants to tap into that growth. In the analysis of Arizona’s current risk capital environment, the report lists the following strengths for increasing the flow of venture capital here:

  • Arizona has two of the top 20 angel investor groups in the U.S., Desert Angels in Tucson and the Arizona Technology Investor Forum in Phoenix.
  • The Arizona Commerce Authority’s Arizona Innovation Challenge invests $3 million annually in early stage companies, more than any other state-sponsored
    business plan competition.
  • Arizona’s research universities, government agencies, technology industry groups and philanthropic sector actively collaborate on innovation “ecosystem-
    building” efforts.
  • Arizona is home to more than 30 business incubators

The two largest research universities, Arizona State University and the University of Arizona, have new commercialization initiatives with experienced and effective leaders. From 2011 to 2014, the rate of venture capital investments in Arizona companies was approximately 30 percent of the per capita national average. The ABB report creates a goal of increasing the annual rate of venture capital investment in Arizona companies to meet or exceed the per capita national average, a 300 to 400 percent increase, by 2025. “The biggest challenge for these new companies is acquiring risk capital, necessary to move from start-up to the growth stage. That is critical for their success. We have the innovation here in Arizona and proximity to a world-class technology hub right next door in San Francisco,” said Mara Aspinall, co-chair of the ABB. “With this report, we have a solid blueprint for Arizonans to work together across all sectors of business, education and government to build a top-level technology-based economy. That will mean more jobs and stronger communities across the whole state.” They include:

  • CELEBRATE THE ANGELS – Celebrate the state’s existing highly acclaimed investor groups and cultivate new investors here among affluent executives who retire to Arizona
  • Support Arizona Universities’ technology transfer efforts – Build systems such as grant matching programs, university-centric seed investment funds, state business competitions and regional accelerators
  • Host technology and investor events – Take advantage and tie into Arizona’s track record of creating memorable experiences for visitors and showcase the state’s innovation assets and high-potential companies
  • Connect Arizona companies with investment epicenters – Aggressively support homegrown companies to attract venture capital where it is managed, particularly taking advantage of the Bay Area but also connect with East Coast hubs
  • Build a pipeline of investor-ready companies – Continually develop this pool, but also create venture facilitation models for next-stage companies within five years of inception
  • Encourage equity participation from public investing entities – Educate state investment vehicles on the opportunities and challenges for investing in early stage companies
  • Develop Arizona’s venture capital industry – Grow local firms capable of leading syndicated deals with institutional venture capital funds and encourage national firms to create regional offices in the state through education on Arizona’s advantages
  • Create a unified voice for Arizona’s capital formation policy – Aggregate industry groups, universities, angel investors and state government leaders into a unified voice

“Arizona has significant leverageable assets, but we are not the only state looking outside our borders hoping to facilitate increased access to capital for our innovators,” said Ron Shoopman, ABB co-chair, “Technology-driven companies are the future. Improving Arizona’s competitiveness for private investment is an urgent priority for the region’s stakeholders, and this report provides a comprehensive map to get us there.”

The report was commissioned by the ABB to foster development of a customized strategic blueprint for Arizona that attracts private investment and creates jobs. It builds on the Flinn Foundation’s Arizona Bioscience Roadmap, updated in 2014, and the Entrepreneurial Economy for Tucson Task Force’s 2012 statewide Vision for the Future. The full report of the study, conducted by Cromwell Schmisseur LLC.  A full list of ABB members who worked on this special project is included in the report. The Arizona Bioscience Board (ABB) is a select group of CEOs and other leaders from bioscience and other industries across Arizona who joined forces to serve as a catalyst for developing solutions to critical issues facing the biosciences and technology-driven industries in the state. Its mission is to engage leaders statewide – across all industries and levels of government – to achieve the vision of building the state’s short- and long-term economic growth through technology-driven industries

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