What a great year 2016 has been for Arizona’s technology sector. We are on the rise and actively competing with the top technology states and cities in the country. This is in no small part thanks to our state’s business and legislative leadership who have made tremendous strides in making our business landscape more attractive to quality technology companies. As we look forward to creating a great future, we look back at 2016 to appreciate the momentum we have gained.
The Arizona Technology Council itself has experienced many positive changes, including a new addition to our team. We welcomed Lauren Witte to take over as our marketing and communication manager after saying goodbye to Merry Lake Merrell, who leaves us after an almost nine-year tenure to join Frost & Sullivan. We also are making great strides towards providing the best possible experiences for our members, growing the science and technology sectors of our economy, and increasing the number of high-paying jobs in the state. To continue our efforts to influence legislative policy positions at the local, state and federal levels, our Public Policy Committee welcomed two new co-chairs, Jason Bagleyof Intel and Rachel Aja of Cox Communications.
The council also formed new committees such as one focused on additive manufacturing, which is essentially 3-D printing. And the Arizona Optics Industry Committee, Optics Valley, was formed though a collaborative agreement in 2016 between the council and the Arizona Optics Industry Association. Together, we will focus on continuing to grow this major subsector of the economy by holding optics-focused events and helping influence public policy.
Overall, our economic development outlook is strong, and the technology industry has been a major player in welcoming top businesses from across the country into Arizona. Raytheon announced its Southern Arizona expansion will add nearly 2,000 jobs during the next five years. We also saw Vector Space, Lucid Motors and Galvanize all announce the opening of new locations in Arizona to come in 2017 and 2018.
As we work to develop innovative and impactful homegrown companies, our entrepreneurial ecosystem had its strongest year ever. Steve Case, co-founder of AOL turned serial entrepreneur, brought his Rise of the Rest startup competition to Phoenix after Arizona was identified as a growing startup market. Scottsdale-based medical-device startup NeoLight LLC, founded by ASU graduates in 2014, won the pitch competition and was awarded a $100,000 investment from Case and Rise of the Rest.
The Arizona Commerce Authority again added its support with its biannual Arizona Innovation Challenge, which has attracted more than 1,000 startups vying for investments of $100,000 to $250,000 ($3 million total available per year). Many of these startups will now have the opportunity to grow and create jobs in the state.
There even has been positive news on the venture capital front. Thomson Reuters data shows that in the first half of 2016, Arizona’s investment total of $123 million had surpassed the $119 million invested in all of 2015.
To facilitate the growth of risk capital in Arizona, the council’s Public Policy Committee will place a heavy emphasis on convincing Gov. Doug Ducey and the Legislature to recapitalize the Angel Investment Tax Credit program in 2017 based on the incredible return on investment it has provided to the state. More than $420 million in financing is attributable to this program, in addition to the $62 million raised through the credits for investments. The program paid for itself almost 2½ times over just in taxes paid by the companies that received private-sector investments. However, the program ran out of money and angel investments in Arizona have stalled.
If we are successful in recapitalizing the program, our state will continue to grow its available capital for startups. The new money will help encourage more venture funds to start here and invest in Arizona companies.
From a job creation standpoint, we have worked hard to create programs in 2016 that will carry over into the new year. Arizona joined President Barack Obama’s TechHire initiative in December. The council and ACA are spearheading the effort alongside the new state Office of Economic Opportunity by leveraging resources of our existing workforce community to expand tech talent. The overall goal of this initiative is to grow our economy while providing technology jobs for undereducated, disenfranchised youth.
CompTIA’s 2016 Cyberstates report highlighted the fact there are more than 135,000 tech industry jobs in Arizona. This means 61 of every 1,000 private sector workers in Arizona are employed by high-tech firms. On a national level, Phoenix is ranked third for tech job growth among large markets in CBRE Research’s annual “Scoring Tech Talent” report.
As we look forward to 2017, we see an emergence in technology subsectors such as FinTech, MedTech and EdTech that will help bring more jobs to Arizona. The software industry merits special attention. In August, former Infusionsoft CMO Greg Head started publishing “Gregslist” of Arizona software as a service (SaaS) firms and has more than 200 Arizona-based software companies listed, with more startups joining the list weekly.
Our collective efforts in building Arizona’s technology community as the driver of the state’s economy didn’t go unnoticed by the national media. The coverage in 2016 focused on many of the initiatives I’ve mentioned, with articles in Forbes, the Wall Street Journal, the New York Times and more.
The outlook for 2017 is encouraging and it may become Arizona’s most robust year since the recession. Business philosopher Peter Drucker has said the very best way to predict the future is to create it. It is the responsibility of the Council and the state’s technology leaders to continue to push for government support and bolster the startup landscape by providing more opportunities for technology companies to grow. Our conscientious strategic efforts and planning will make this happen.