I. Executive Summary
Experiments in Other States – A Brief Guide to State Capital Formation Programs & Policy Simply throwing money – public or private – at the capital access problem will not solve it, as too many other states have demonstrated. The development of innovation ecosystems is complicated work requiring leadership, collaboration and alignment on basic principles. Section V of this report – Principles for Risk Capital Initiatives – uses lessons learned from other states to describe four basic principles required for an initiative to achieve real success: 1) Programs should be capitalized efficiently; 2) Investment managers should be selected competitively; 3) Investments should be restricted to areas not reasonably served by existing investors; and 4) Program financers –state or private – should participate pari passu in investment returns. Recommended Portfolio of Complementary Strategies for Capital Formation in Arizona Section VI concludes the report with eight recommendations for the Arizona Risk Capital Initiative: 1. Celebrate the Angels. Accredited investors, whether acting individually or through one of the highly acclaimed Arizona groups, are economic development heroes that should be celebrated as such. Already a destination for affluent retired executives, Arizona should cultivate this strength with the best policies and services for angel investors in the U.S.
2. Support university technology transfer efforts. Research commercialization and technology transfer initiatives associated with academic institutions should receive broad, sustained support. This support should be inclusive of SBIR/STTR grant matching programs, universitycentric seed investment funds, state business competitions and regional accelerators, for these programs prime the pump for Arizona’s regional innovation economies.
3. Host technology and investor events. Arizona thrives at creating memorable events and experiences for visitors. Investor and tech industry conferences provide natural tie-ins with existing tourism initiatives and sports and entertainment that can provide showcase opportunities for the state’s innovation assets and high-potential companies.
4. Connect Arizona companies with investment epicenters. There is a need to aggressively support homegrown companies in their efforts to attract venture capital wherever it is managed. The largest, closest venture investment hub is the greater Bay Area in California; however, connections to investment hubs along the East Coast should also be made. 5.
Build a pipeline of investor-ready companies. Improving access to risk capital is the priority need identified in Arizona, however, it is necessary to work diligently and continually on building a pipeline of “investor ready” companies in Arizona. This recommendation includes the development of venture facilitation models designed to increase the rate of venture
© The Arizona Bioscience Board and Cromwell Schmisseur LLC, 2016
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