VI. Recommendations for Arizona’s Risk Capital Initiative
Recommendation #5: Build a pipeline of investor-ready companies •
Key parties: Business Accelerators, Angel Investor Groups, Private Philanthropy
Core to this recommendation is the inclusion of best practice venture facilitation and development models serving Arizona’s entrepreneurs through a coordinated statewide support system. Arizona boasts a number of business incubator and accelerator programs. The focus of this recommendation is to support and strengthen existing organizations and filling gaps in the state’s entrepreneurial ecosystems as needed. The goal is not more accelerators, but rather supporting and connecting programs demonstrating success with measurable outcomes – quality of programs over quantity is key. Programs operating in Arizona such as BioAccel in Phoenix and the Center for Entrepreneurial Innovation in Tucson are examples of initiatives meeting market needs. Venture facilitation programs have been effectively used in other regions to increase private investment and help solve the “chicken vs. egg” challenge of equity-based investing. Two important features of successful programs are1) a focus on attracting executive-level talent with domain expertise to help “de-risk” a potential investment, and 2) an active information feedback loop between innovators/entrepreneurs and investors. 1. Educate Arizona innovators about the venture capital investment model, the “red flags” that discourage savvy investors and other coaching tips that prepare technologists and entrepreneurs for the adjustments required to manage the expectations of investors. 2. Recruit a core team of 4-5 executives who possess technology and venture development credibility with institutional investors in industries aligned with Arizona’s strengths (as evidenced by personal recommendations from multiple investors in targeted sectors). 3. Recruit university presidents/chancellors, corporate CEOs and philanthropic leaders to actively participate in organizations responsible for recruiting executive talent and monitoring their performance. 4. Recruit C-suite executives from the Bay Area to attach to projects developing Arizona-based companies, even where a commuting engagement is facilitated in lieu of a relocation. 5. Where practical, develop models to participate in the equity ownership of companies that successfully raise venture capital, thereby creating opportunities to ultimately offset continued philanthropic support with capital gains from the company portfolio.
© The Arizona Bioscience Board and Cromwell Schmisseur LLC, 2016
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