By Jay Gonzales –
Report Paves Way for Bioscience, Technology Growth
A detailed and wide-ranging strategy is underway in Arizona to tap into the hundreds of millions of dollars of venture capital that are invested nationwide in bioscience and technology innovations, drawing in business, political and community leaders throughout the state.
Leaders of the Arizona Bioscience Board said they are making sure the 52-page report that details the strategy stays on the radar of everyone involved so it doesn’t become a document full of great ideas without great results.
The report – Risk Capital in Arizona: Observations and Recommendations to Accelerate the Growth of the State’s Innovation Economy – was released in March after more than a year of input, meetings and buy-in throughout the state. The outcome was eight specific strategies that are now in the implementation stage. The first activity is a “mini-investor summit” in early June where the board, in conjunction with the Arizona Commerce Authority, arranged for four to six Arizona companies to meet with four venture capital firms at the 2016 BIO International Convention in San Francisco.
“We didn’t do this because we wanted to create a report,” said board co-chair Ron Shoopman, president and CEO of the Southern Arizona Leadership Council. “We did this because we have a commitment to building the innovation economy in our region and state. We believe Arizona’s future rests largely on building the infrastructure around this kind of job growth.”
The Arizona Bioscience Board was formed in 2014 with the specific goal of making Arizona one of the top five states for the bioscience and technology industries. The board also recognized that access to capital for Arizona companies is critical to the effort and that geography alone puts Arizona in a difficult position.
The report points out that 70 percent of venture capital is invested in companies in three states – California, Massachusetts and New York – and that 75 percent of all venture capital is managed by firms in those same three states.
“I like to call Arizona the diamond in the desert,” said ABB co-chair Mara Aspinall, who also heads two healthcare technology firms. “Unfortunately for a lot of venture capitalists, it’s the hidden diamond in the desert because they don’t know about the strengths of our companies.”
A recent report on the state’s bioscience industry commissioned by the Flinn Foundation out of Phoenix showed that Arizona is gaining bioscience jobs at a faster pace than the rest of the nation and that the state’s percentage of venture capital has been growing. The flip side to the venture capital issue is that Arizona’s share of venture capital for bioscience innovation represents about one-half of 1 percent of venture capital investments in the bioscience industry nationwide.
Yet the ABB chairs are quick to point out that Arizona has all the makings for a strong bioscience and technology industry with already abundant job growth and three state universities that are putting more emphasis on technology transfer.
“We have some advantages in Arizona that other states don’t have,” Shoopman said. “We have three universities engaged in research, two of them extensively, and all three of their tech transfer offices have been ramped up significantly over the last few years.”
David Allen, VP of Tech Launch Arizona, the arm of the University of Arizona whose purpose is to transfer the school’s research and innovations into the marketplace, is hopeful the ABB report will lead to action that will help Arizona’s technology companies as opposed to being another set of good ideas that never come to fruition.
“Anything that can bring more capital sources into the fold is positive,” Allen said. “All the things that are part of (the report) are the right things. But there have been many studies over the years and there hasn’t been a lot of change. So maybe this one will accelerate that pace much greater than in the past.”
Allen spent 10 years in a similar job at the University of Colorado as associate VP for technology transfer before coming to the UA in 2012. He said he experienced a transformation there that appears to be the exact end result that is being sought in Arizona.
“It’s doable,” Allen said. “Boulder went through a major transformation in the decade that I lived there – going from three or four venture capital sources to about a dozen.
“You would think there’s a lot of opportunity (in Arizona). It’s good to see community leaders focused on it. I don’t think it is part of the broader business discussion yet. When it becomes one, maybe we’ll have even greater results. There’s a lot to be done.”
Shoopman said the buy-in the ABB experienced as it began to produce the report shows a widespread recognition that developing a robust bioscience and technology industry is a no-brainer for the state and that business, community and political leaders are behind the effort.
“When we were calling people to ask them if they were interested, the only question was, ‘What day can you come?’ ” Shoopman said. “The people within the state have a willingness to partner with others for the common good. It serves their individual interests but it serves the state’s interests. So that collaborative gene gives us a fertile ground to take on an effort like this.”
Key to the buy-in, the co-chairs said, was giving key constituents an opportunity to contribute to the report, make suggestions and add to the conversation. The end report was significantly different than the early draft as valid suggestions were incorporated.
“What we did was something unique to reports in general,” Shoopman said. “We said there are a lot of stakeholders and really smart people so we’re going to vet this report across the state, and we’re going to take as much time as required to make sure that we touch base with everybody who shows an interest in looking at it. So we had a lot of meetings and hundreds of emails and we took input for nine months.”
Aspinall said, “I think we met with 18 different groups from chambers of commerce and groups within the innovation economy, to groups in the business world and community groups. And I think we gained the credibility by saying, ‘Oh yes, we should change the report to include that.’ ”
Though local tech companies like Raytheon Missile Systems aren’t specifically involved in the biosciences, the focus on finding sources of funding for budding technology companies is welcome news overall.
“The rise of bioscience in Southern Arizona has brought new technology-driven organizations operating in a dynamic growth industry to the southern part of the state, developments that are welcomed by Raytheon,” said Taylor W. Lawrence, president of Raytheon Missile Systems. “ABB is playing an important role by heightening awareness of the shortage of risk capital − new investment that is required for this sector of the state’s innovation economy to grow to its potential. ABB’s Risk Capital Report and its blueprint for action, if successfully implemented, can spur growth in the Arizona economy, adding more high-paying technology jobs.”
Now comes the hard part – implementation of the eight strategies outlined in the report:
1. Honor the angels (angel investors)
2. Support university technology transfer efforts
3. Host technology and investor events
4. Connect Arizona companies with investment epicenters
5. Build a pipeline of investor-ready companies
6. Encourage equity participation from public investing entities
7. Develop Arizona’s venture capital industry
8. Create a unified voice for Arizona’s capital formation policy
“We’re dividing and conquering to look at each of those to say what does it take for each, how do we prioritize them, and to look at which truly have short-term impact and which have long-term impact,” Aspinall said.
Then Arizona has to compete in what is a crowded field nationally and even internationally.
“Companies are competing for funding with companies around the country and really around the world,” Aspinall said. “So the quality of the ideas and the people have to be as good as anything anywhere.
“Not one of those individual (strategies) alone will do it. A sustained effort and ongoing focus is required to make big strategic shifts. This is a pretty sizable strategic shift for this state.”