Startup Success

Strong Entrepreneurial Ecosystem Yields Record New Ventures

By Darci Slaten

Tucson is home to a robust entrepreneurial ecosystem that enables new companies and ideas to launch and thrive, thanks to the efforts of a vast academic and tech-driven network across the University of Arizona along with groups such as Desert Angels, BlueStone Venture Partners, DVI Equity Partners and more.

In fact, in FY 2020, a record 19 new ventures were launched out of UArizona alone, through Tech Launch Arizona, despite the COVID-19 pandemic. 

“This accomplishment is the result of strategic collaborations between inventors and the right mentors, experienced entrepreneurs, and other community collaborators,” said Douglas Hockstad, assistant VP for Tech Launch Arizona.

BizTucson asked several key players in the region to reflect on Tucson’s standing as an innovative, supportive home base for startups. 

Tucson’s Progress 

What progress within your organization has placed Tucson in a position of entrepreneurial strength? 

 “Even during the pandemic, innovation and entrepreneurship at UArizona haven’t slowed,” said Hockstad. Among the 19 new startups, two repositioned themselves to directly address the pandemic: Botanisol Analytics and SaiOx. 

At the start of the COVID-19 crisis, “incubators across the nation made the assumption that startup activity would drop as entrepreneurs rarely make a salary at the beginning of their journeys, and there would be an increased need for them to get paid jobs,”  said Eric Smith, executive director of UArizona Center for Innovation. “Across the nation, incubators saw 40 to 60% of their startups go out of business, but we have not lost one to date here at the UA Center for Innovation. 

“About 50% of the startups we serve are UArizona affiliated startups and the other half come from the larger Tucson community. We also serve a handful of startups from around the nation and globe.”

Liz Pocock, CEO of StartUp Tucson, said, “We have launched several initiatives designed to support entrepreneurs – especially those who have had to pivot during the pandemic. For example, we have developed a ‘Startup Fundamentals Series,’ added new technical workshops and revamped our mentorship program.”

Desert Angels pivoted quickly after the pandemic hit, moving business online while still making a positive impact. 

“Our members invest capital, but often, will also provide additional mentoring and expertise, industry connections and other resources to science and tech companies,” said Desert Angels CEO Joann MacMaster. “We are now working on a new strategic plan that will continue these efforts while building value for our members, the companies with which we engage and our community partners.”

“Doing business online gives us new opportunities to connect with our members and community partners, collaborate with other angel groups, and meet with a broad range of companies regardless of geographical location. In short, we’re seeing more activity and our members are actively investing,” said MacMaster.

Tucson’s Appeal

Why is Tucson the place to start a new venture?

Mara G. Aspinall, managing director for BlueStone Venture Partners, listed several reasons why Tucson is a prime market:

•  Interesting place to live and work

•  Low cost of living and company overhead

•  Community resources and education to assist  with early ventures

•  Access to talent coming out of UArizona

•  Tech transfer opportunities with UArizona

Fletcher McCusker, CEO of UAVenture Capital added, “Pre-pandemic, Tucson was being considered the next Austin with its tech jobs, rich culture, a great university, great ideas, great leaders looking for financial partners and, moreover, deal flow.” 

The region has “access to good, well-educated technical talent, a growing population, tax benefits, a municipality that supports the entrepreneurial spirit and access to people that have done it before and have had successful exits,” said Robert Griffin, managing partner at DVI Equity Partners.

“Tucson’s appeal as one of 10 best cities for startup costs, compared to other markets across the nation, is gaining momentum,” said Carol Stewart, associate VP of Tech Parks Arizona. “We are a connected community dedicated to seeing Tucson startups succeed by providing the best level of business development support possible. Here at the Tech Parks, we create interactive communities, where emerging companies and technology giants work side by side,” Stewart said. “That environment is rightfully gaining national attention.” 

“Startups feel supported in Tucson,” said Eric Smith, executive director of the UArizona Center for Innovation at Tech Parks Arizona. “Our innovation ecosystem is very in sync and operates as one support umbrella for our companies. We often find that our startups take advantage of other programming, community mentors and local connections. Entrepreneurs that take advantage of the resources our community has to offer tend to be more successful in our incubator.”

Further, startups in previous “hot spot” regions, such as the Bay Area or Seattle, are looking at Tucson as a better environment to succeed. “In fact, we are in the process of working with a venture capital firm that did a competitive nationwide location search and chose to locate one of their newly formed biotech startups here at the UACI in Tucson,” said Stewart.

What resources does Tucson have that startups and talent can access to succeed?

Innovation, talent, capital and expertise, said MacMaster. “Tucson offers resources that startup founders want: a diverse and welcoming community, a reasonable cost of living, an exciting Old Pueblo history that connects the past to the present, networking and collaborative events that enable founders to share stories and ideas and, of course, more than 320 days of sunshine,” she said.

Pocock added, “Tucson has grown a lot as an ecosystem of partners that support entrepreneurship over the last few years. With so many new resources, we created the Tucson Startup Ecosystem Guide, made possible by the Southern Arizona Leadership Council.” It’s a free guide outlining all regional resources available to entrepreneurs. 

Hockstad also reinforced the importance of UArizona. “A strong public research university is a key component in nearly every successful innovation ecosystem, supplying both innovation and a pool of young talent,” he said. 

Within UArizona, Tech Launch Arizona offers resources to bolster technologies that form the basis of startups. Its asset development program provides funding to reduce the risk of early-stage inventions. Its venture development group helps the inventing team create a viable company, while other programs help navigate the customer discovery process and commercialization strategy.

The innovation ecosystem is expanding on several fronts. The University of Arizona Center for Innovation broke ground last year on its new incubator, UArizona Center for Innovation at Oro Valley. “Additionally, we are building our first building at UA Tech Park at The Bridges, which will focus on innovation,” Stewart said. 

Strategies Going Forward 

What will make the entrepreneurial ecosystem even stronger?

Dre Thompson, executive VP for StartUp Tucson, offered a few strategies going forward:

• Level the playing field – Create greater balance between the incentives and support given to large, external companies and the support provided to homegrown companies, especially in accessing online markets.

• Access to capital – Continue to make capital accessible to local entrepreneurs, with a focus on those who have been blocked from traditional forms of capital.

• Long-term workforce resilience – Enable more workforce development and training through expanding entrepreneurial education to adult learners, focusing on accessible coding schools to support the growing tech sector.

• Minimize risk – Advocate for policies that better allow entrepreneurs to “take the leap” without severe risk and provide an effective social safety net.

The entrepreneurial community should also focus on diversity – not only within inventors’ ethnicity, gender and backgrounds, but also in multiple industries and geographic locations, Aspinall said.

 “Tucson has many of the key elements of an ecosystem that lead to success – entrepreneurs and innovation, talent, expertise and opportunities for collaboration,” said MacMaster. “We’re positioned for the next stages of growth and we’re gaining momentum.”

Griffin said Tucson must “continue to evolve our ecosystem or fall behind. It’s very competitive – everyone wants the next Google or Amazon and will market themselves as the best place for these young startups. We have to market the city and its capabilities. We have to push for that competitive advantage that makes us rise to the top – whether it’s tax incentives, the best infrastructure, cheap clean power, data center availability or the biggest, fastest communications capability in the southwest U.S.” 

“We must keep our focus on translating UArizona discoveries to society,” Hockstad said. “To achieve that, we’ll need continued investment funds available for these nascent startups, a growing base of experienced entrepreneurs, along with ongoing engagement from companies at all stages of evolution – startups, growing companies and mid- and large-sized companies.”

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