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Spotlight on Arizona: an innovation ecosystem to support economic growth

Sometimes labeled ‘Silicon Desert’, the state of Arizona in the USA has seen a tech sector explosion, with multinational companies increasing their profile in the region, supported by a growing entrepreneur and innovation ecosystem. Companies like Apple, GoDaddy and General Motors have all boosted their presence in the state, and the entrepreneurial ecosystem is also surging.

New innovative startups are being nurtured by various state and private sector programs, and each year thousands of high-tech firms are locating in Arizona.

Supporting the early-stage innovators is a community of more than 50 accelerators and incubators assisting technology, IT, biotech and manufacturing companies’ advance from idea to commercialization. Local startups are finding success collaborating in working spaces designed to provide them technical expertise, mentorship and funding.

According to Sandra Watson, president and CEO, Arizona Commerce Authority, “Arizona’s innovation sector is blossoming. Companies continually seek resources to support their commercialization efforts, and selecting the right business environment is critically important to achieving long-term success for startups.”

‘Innovation Summit’ and ‘Venture Madness’ – promoting the state’s startups

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The state has a number of annual events and initiatives during the year to support potential high-growth tech startups.

One of these, the ‘Innovation Arizona Summit’ nurtures startup firms, and is a joint collaborative of the Arizona SciTech Festival, the MIT Enterprise Forum Phoenix and the Arizona Commerce Authority.

In August 2014, nearly 1,000 attendees including leaders from business, industry, education, and government participated and explored the lifecycle of innovation—from idea to commercialization. Dialogue focused on advances in STEM (science technology, engineering and math) education, discoveries made in Arizona and technology transfer opportunities. Entrepreneurs and investors shared best practices and examined the connections between science, technology, entrepreneurship and innovation.

“STEM skills are pillars of our education system as well as key drivers of business growth in today’s global marketplace, and the link between businesses, educators and talent is critical to innovation and economic development,” Watson says. “The event is another strategic way for startups to engage with the community around a unifying theme that straddles both the public and private sectors.”

Similarly, Venture Madness, a unique business pitch competition held each spring brings together the Southwest’s startup community, and provides important networking opportunities for entrepreneurs and attending investors to connect. Presented by Invest Southwest in partnership with the Arizona Commerce Authority, the best and brightest ventures in the region enter into a head-to-head competition for their share of $50,000 in cash prizes to help their businesses grow.

Gabriel Hyams, president and executive director of Phoenix-based tissue bank Pinnacle Transplant Technologies, last year’s grand prize winner, states, “More than anything, Venture Madness gave us exposure. We haven’t had a lot of community marketing or outreach because we’ve been developing the business for the last three years and the event allowed us to increase the awareness of who we are and what we do.”

Funding on the increase in the Southwest

Venture capital making its way to Arizona companies is reaching new levels and being pushed by statewide programs that include the Arizona Innovation Challenge, Arizona Innovation Accelerator Fund, Arizona Fast Grant and PIII Playbook. These programs help growth companies secure commercialization funding that also boosts their attractiveness for additional capital investment from the private sector.

According to a 2014 study conducted by California-based Silicon Valley Bank, companies in the innovation sector within the southwestern U.S. (Arizona, Nevada, Utah, Colorado, New Mexico, and Texas) reported the nation’s highest rate of hiring as well as solid performance in 2013 and optimism for a better year ahead. Fifty-four percent of survey respondents from the Southwest successfully raised private capital in 2013, which was a larger proportion than the national average. The majority of the private capital they raised reportedly came from venture capital and private equity investors.

Silicon Valley Bank’s Arizona-based banking team, which works with local innovators such as Infusionsoft and WebPT, is also seeing increased activity within the state. This growth has prompted Silicon Valley Bank to make a commitment to lend or invest at least $100 million to technology and life science companies based in Arizona over the next five years.

Weebly, a global website service based in San Francisco, also found Arizona’s tech community and local talent a match for its own growth plans. The company recently announced an expansion to Scottsdale that will create an economic impact estimated to be $256 million over the course of the next five years. The company operates more than 20 million Weebly sites worldwide.

David Rusenko, co-founder of Weebly says in a statement: “We’re extremely excited to open our new customer operations headquarters in Scottsdale. There is an amazing pool of quality talent in the area.”

Real-time access to statewide research

Arizona is also committed to advancing research and development in the high-tech industry. Its three public universities increased total R&D expenditures by nearly 25 percent from 2008-2012, with more than $4.7 billion in research conducted during the same period.

This year, the Arizona Board of Regents (ABOR) partnered with the ACA, to unveil SciVal Experts, an online database that provides real-time access to research taking place within Arizona’s university system to attract additional R&D investment, as well as create new tech transfer opportunities and spinoff companies.

“University research plays such an enormous role in driving the state economy,” says Eileen I. Klein, ABOR president. “We have aggressive goals aimed at helping Arizona strengthen its position in the global marketplace, one of which is to double university research expenditures to $2 billion annually by 2020.”

The system is designed to give fresh opportunities to university researchers, students, innovative companies, industry and entrepreneurs who are seeking to access the scholarly work taking place at the three state universities – ASU, NAU and UA.

“SciVal will help us attract and retain top-tier research faculty and maximize our ability to attract future research funding,” adds Klein.

This article is based on an article published in the TechConnect blog, Arizona’s Technology Magazine

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