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Is ‘Silicon Desert’ the next Silicon Valley?

In watching successful innovation clusters evolve around the world, we’re beginning to see the theory of creating an innovation ecosystem being successfully deployed in practice, with appropriate localization according to the destination. Whether it be the USA, UK, Germany, India, Brazil, or some countries in the Middle East, every government (national and local) appears to now recognize that they need to work with industry and academia to create the right environment, highlight role models and case studies for innovation and entrepreneurship, and stimulate an ‘innovation economy’.

While this week many people are gathered at the Global Innovation Summit in California to ‘learn’ how to create innovation ecosystems in their own regions (see report related to last year’s event here), others are successfully demonstrating the fruits of their efforts over recent years.

One such example is the state of Arizona. Next week, they will have their own ‘Phoenix Startup Week’, which will embrace over 130 free events for the startup community, created by entrepreneurs for entrepreneurs. While this is a pattern seen in many cities around the world, Arizona seems to have made this part of a plan, and commentators in the USA appear to be calling ‘Silicon Desert’, as Arizona is sometimes labeled, the next Silicon Valley.

city-03-luhrs Phoenix technology and innovation hub location-small

Innovation hubs coming up in Phoenix

For example, GeekWire said recently that Phoenix is quickly and quietly becoming a hub for innovation. It is creating ideas, with vibrant startup programs at Arizona State University, plus a growing number of incubators, accelerators and co-working spaces, together with a number of potential customers and investors, plus streamlining of regulations and taxes by the state government. Even companies from Silicon Valley, California, are establishing bases in Arizona, because of the more attractive working and living conditions and lower cost of living that Arizona offers, while still having proximity to their headquarters.

Testament to this, Apple has just announced a major $2billion investment in Arizona to set up a global data center in Mesa, Arizona. While it will employ 150 people there, it also has the benefit of Arizona’s sunlight, so it has pledged to completely power the facility with renewable energy.

Courtney Klein, founder of an accelerator called SeedSpot, said a key catalyst to the startup ecosystem growth in Phoenix has been the increase in incubators, accelerators, and co-working spaces. But this is just one aspect. For example, Arizona runs an annual Scitech Festival to encourage science and technology interest among youngsters, nurturing the next generation of talent and skills for a technology-enabled economy.

Then there is an innovation challenge held every year, in which the Arizona Commerce Authority commits $3million annually in grant funding to help innovative startups and early stage companies commercialize their technology and generate revenue within 12 months. Each company awarded can receive up to $250,000 in grant funding, and so far seven rounds of the competition have been run since 2011. In the latest competition (Fall 2014), 44 Arizona Innovation Challenge grants were awarded to Arizona’s entrepreneurs.

In addition to this, Arizona Commerce Authority, in conjunction with Invest Southwest, also holds an annual ‘Venture Madness’ competition (see report from last year), which is a unique competition that pits 64 early stage growth companies against one another in a bracket-style, head-to-head competition.  According to Sandra Watson, president and CEO, Arizona Commerce Authority,  “Venture Madness is a unique program among the many opportunities Arizona offers early-stage growth companies. Engaging with these companies is an important part of our mission to strengthen and expand Arizona’s overall economy.”

Writing in Forbes magazine, she adds, “Arizona developed a blueprint for success three years ago that streamlined our tax and regulatory environment, established a suite of programs for companies of all sizes, and put us on the map as a global contender for major business expansions.” Steven Zylstra, president and CEO of the Arizona Technology Council, added that the recent explosion of tech growth in Arizona is anything but accidental.

In the article, the ACA says Arizona has more than 7,600 high-tech companies operating within the state, providing hundreds of thousands of jobs for technology professionals. Bioscience and healthcare, two of the state’s biggest technology sectors, have created over 100,000 jobs, generating $36 billion in annual revenue in the process.

This essentially highlights how one state, Arizona, has been able to implement a plan to nurture talent and skills to provide a melting pot for startups, high growth tech companies, and established companies, while providing a good business environment for an economy to stimulate growth through innovation and entrepreneurship. So ‘Silicon Desert’ is, in its way, becoming its own version of the successful Silicon Valley ecosystem that many regions often aim to model themselves on.

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