Table of Contents
Sponsors | Supporters | Methodology | Critical Factors to Success | Capital Access

Assistance to Entrepreneurs | Role of State Government | Other Important Issues | Printer Friendly Copy |

Arizona Entrepreneurs:
Critical Factors To Success

Copyright April 2002 all rights reserved worldwide by Profit Dynamics Inc., Dee Power and Brian Hill. Permission is granted to reproduce all, or part of this report as long as credit is given to Profit Dynamics, Dee Power and Brian Hill.

Arizona's entrepreneurs are increasingly vital contributors to the state's economic growth and prosperity. Emerging enterprises lead the way in technical innovation, creation of high-paying jobs, and in diversifying Arizona's economy.

Entrepreneurs choose to start or move their companies to Arizona for a host of reasons, including the ideal climate, the proximity to major markets like California and Mexico, the reasonable wage scale and cost of living, the growth in population and therefore an available skilled workforce. Entrepreneurs view Arizona as a wonderful place to be, and are excited about the future.

But we also must recognize that much needs to be done before our state can join the leaders in entrepreneurial activity and technology. The industries that built the state's prosperity in the latter half of the 20th Century, tourism and real estate, will not be sufficient, by themselves, to allow us to compete in a global marketplace driven by information technology.

This survey was organized on the premise that the people who know best what ingredients need to be in place in order for Arizona to succeed are those individuals striving, and often struggling, to build their companies in Arizona right now-the Entrepreneurs. The report that follows represents the entrepreneurs' consensus blueprint for helping Arizona reach its economic potential in the years to come.

And the entrepreneurs who participated in this survey sincerely hope there are people in government, the media and inside the large corporations who will listen to what they have to say.

Arizona Entrepreneurs: Critical Factors To Success" was written by Dee Power and Brian Hill, Founders of Profit Dynamics Inc., Fountain Hills, AZ. Authors of Attracting Capital From Angels: How Their Money and Their Experience Can Help You Build a Successful Company, John Wiley & Sons 2002 and Inside Secrets To Venture Capital, John Wiley & Sons 2001.

Table of Contents

Sponsors of the Survey

Supporters of the Survey


Critical Factors To Success
The Top Five Factors, Comparative Rating of all Factors, The Top Priorities, Lover Priorities

Capital Access in Arizona
How Much and From Whom, Difficulty of Finding Capital, Investment Seed and Start-up Capital, Entrepreneurs Recommendations To Make The Process Easier

Assistance to Entrepreneurs
Mentors and Guidance, State and City Support Programs, Professional Services Satisfaction, The Media, Quality of Management

the Role of State Government in Arizona to Nuture a Strong Entrepreneurial Community: What do entrepreneurs want?

Other Important Issues To Entrepreneurs

Resources For Arizona Entrepreneurs

These resources for Arizona entrepreneurs are not part of the survey but may be helpful to entrepreneurs. You can find:

Venture Capital firms located in Arizona

Organizations for networking and information

Venture Capital firms that have invested in companies located in the Southwest

Survey of Venture Capital companies and why they do or don't invest in Arizona.

Angel Networks

Venture Capital Conferences

Business or Technology Incubators

Alternatives to traditional venture capital financing


Arizona Entrepreneurs: Critical Factors To Success

Arizona Angels Investor Network, Dee Harris, Managing Director

Arizona Public Service, Ed Denison, President

Bowne & Co. Inc., Tom McIntrye

Enterprise Network, Stan Sipes, President

Kinetic Thinking, Charles Martin

Profit Dynamics Inc., Dee Power, Brian Hill, Founders

Salt River Project

Snell & Wilmer Law Offices, Quinn Williams, Partner

Southern Arizona Tech Council, Bob Hagen, Chairman

Tucson Electric Power


Arizona Optics Industry Association (AOIA) -

Arizona Small Business Association -

Arizona Internet Professionals Association AZIPA -

Arizona Venture Capital Conference -

BioIndustry Organization of Southern Arizona (BIO/SA) -

Environmental Technology Industry Cluster (ETIC) -

Greater Flagstaff Economic Council

Greater Phoenix Economic Council -

Greater Tucson Economic Council (GTEC) -

Information Technology Association of Southern Arizona (ITASA) -

National Association of Women Business Owners, Phoenix

Northern Arizona Technology and Business Incubator -

Plastics & Advanced Composite Materials Cluster

Southern Arizona Industry & Aerospace Alliance (SAIAA) -

Tech Oasis -

TiE-arizona -

Tucson Metropolitan Chamber of Commerce (TMCC) -

Young Entrepreneurs Organization, Phoenix


Entrepreneurs across the state were asked what they thought were the most critical factors to their success in the Arizona business environment. The survey participants were also asked to rank their satisfaction with the professional community, the media, whether mentoring support was available and whether they had utilized the local and state sponsored assistance programs. Additionally several questions focused on the subject of obtaining funding, whether bank loans, venture capital or from private investors. The survey was conducted from January 24th through February 22, 2002, by a web based survey site, by email, and in person at a local networking meeting. Organizations and associations that supported the survey asked their membership to participate as well.

403 entrepreneurs completed the survey. 81% were from the Phoenix metro area, 11% from Tucson, 2% from Flagstaff, and 6% declined to specify where they were located.

65% of the respondents were male and 35% female. 64% were between the ages of 36 to 55 years old. 80% had at least a four year college degree or advanced degree.

26% were very early stage companies, either seed or start-up. 26% were first stage and 41% were at least two years old.

The respondents were truly a cross-section of entrepreneurs, from the earliest "idea" stage to those companies that are established and profitable.

Critical Factors To Success

The Top Five Factors

Arizona's entrepreneurs believe the most important keys to their success are:

1. Access to early stage venture capital -- private investors

2. Networking/ information exchange opportunities

3. Education for entrepreneurs- seminars, workshops, training programs

4. Business leadership involvement in building Arizona's entrepreneurial image

5. Presence of more corporate headquarters

Entrepreneurs were asked "What are the most critical factors entrepreneurs in Arizona need in the business community in order to be successful?" And to select the five most important factors in priority order, the most important factor as 1, the least important factor as 5.

Comparative Rating of All Factors

Entrepreneurs have a strong idea of what they need to succeed. A wide variance-1.45 points- as shown in Table 1 existed between the factors rated most and least important by entrepreneurs. Table 1 Average Rating Of All Factors (starting with most important):
Access to early stage venture capital - private investors 2.28
Education for entrepreneurs 2.67
Networking/information exchange opportunities 2.68
Presence of more corporate headquarters 2.81
Strong business leadership 2.86
Available management talent 2.88
Accessible and skilled workforce 2.95
Business community awareness/understanding/support of entrepreneurs 3.07
Superior education system, K-12, colleges and universities 3.09
Reputation of business community inside and outside of Arizona 3.10
Other 3.17
Reasonable pay scale/cost of living 3.23
Professionals support structure (accountants, attorneys, etc.) 3.28
Research, development & tech transfer programs of state universities 3.29
Technological infrastructure 3.33
Public-sector understanding/support of business community 3.49
Overall quality of life 3.60
Airport/transportation infrastructure 3.73

The Top Priorities

There are several ways the top priorities can be viewed: the factors can be prioritized based on how often that particular factor was named priority number 1 as shown in Table 2. How often it made the top five overall, Table 3. The average point score can also be looked at, Table 1. And how often the factor was suggested in the essay response questions on pages 18, 23. While Access to Capital is clearly the top factor, the remaining factors vary in ranking.

Table 2 Factors Rated Priority Number 1 By Respondents:
Access to early stage venture capital - private investors 22.2%
Networking/information exchange opportunities 11.9%
Education for entrepreneurs 9.9%
Strong business leadership 7.7%
Accessible and skilled workforce 7.2%
Presence of more corporate headquarters 6.9%

Table 3 Factors Cited Most Often By Respondents
Access to early stage venture capital - private investors 52.1%
Networking/information exchange opportunities 40.9%
Presence of more corporate headquarters 32.0%
Strong business leadership 31.8%
Education for entrepreneurs 31.5%
Available management talent 29.0%
**adds up to more than 100% because each respondent was asked to select five factors out of 18

Table 4 Overall Rating
These factors appear in the top five in each of the above rankings:
Priority Most Often Average Access to early stage venture capital - private investors 1 1 1 Networking/information exchange opportunities 2 2 3 Education for entrepreneurs 3 5 2 Strong business leadership 4 4 5

How the top five priorities were determined

1. Access to Capital was named the top priority by 22% of entrepreneurs and it was named most often overall in the top five priorities, by 52% of respondents. It also had the highest average score when all the priorities were ranked.

2. Networking is in second place because of its second place finish in two categories and third place in the 'average score' category.

3. Education follows Networking because of its third place in 'priority' and fifth place as 'most often' even though it had a better 'average score' than Networking.

4. Business leadership involvement in building Arizona's entrepreneurial image is fourth which reflects the fourth place of Strong Business Leadership in 'priority' and because the four most frequently mentioned responses on page 23 all address the issue of strong business leadership for Arizona, from media organizations, leaders of business development organizations, in enhancing the state's entrepreneurial image, and in direct support of emerging enterprises from large businesses in the state.

5. Presence of More Corporate Headquarters is in fifth place based on its 'average' score, and it is the most suggested recommendation for how the state can nurture a strong entrepreneurial community (page 18).

Lower Priorities For Entrepreneurs

While it's important to look at what are the most critical factors, it's also interesting to look at the least critical factors and these are shown in Table 5.

Table 5 Factors Receiving Fewest Votes For Priority Number 1:
Airport/transportation infrastructure 1.0%
Research, development & tech transfer programs of state universities 1.2%
Public-sector understanding/support of business community 1.2%
Reasonable pay scale/cost of living 1.5%
Overall quality of life 1.7%
Technological infrastructure 1.7%

A surprising result was that Research and Development & Tech Transfer programs were ranked so low. These are often thought to be a catalyst for entrepreneurial activity in a region.

The chart shows a comparison of the most critical and least critical priorities and their variance from an average score of 3.

Arizona Public Service

Nearly 9% of respondents chose the category 'other' and volunteered their own ideas about what should be one of the five priorities. Selected comments are in quotes below:

"Support and programs, loans, grants from state, city and county governments."

"Reduced competition and opposition from the existing electrical Utilities toward Renewable Energy."

"Lower taxes."

"Business climate offered by the state. Is it supportive? Is it friendly to business?"

"Reasonable cost for health benefits for small businesses under 10 employees."

"Community understanding and endorsement. Media support of entrepreneurs."

"Promoting local startup companies on TV, newspapers, magazines, locally and nationally."

"Mentors with technical, communications, and regulatory knowledge--all of the areas needed to run a startup business."

"A Private University System. We cannot depend upon the state for such a crucial resource."

"Create one huge competitive advantage available nowhere else in the world."

Capital Access

How Much And From Whom?

60% of the respondents had tried to raise capital or find investors (besides family and friends) to start or expand their company.

Of this 60%, most of the entrepreneurs were looking for private investors or angel investors (31%), while 11% were looking for venture capital, 13% for bank loans and 5% from other sources.

59% of those attempting to find funding were looking for $1,000,000 or less. The most common level of funding needed was split between the ranges of $500,001 to $1,000,000 and $1,000,000 to $3,000,000.

Amount of Capital Sought
8% less than $50,000
8% $50,000 to $100,000
10% $100,101 to $250,000
9% $250,001 to $500,000
24% $500,001 to $1,000,000
24% $1,000,001 to $3,000,000
7% $3,000,001 to $5,000,000
6% $5,000,001 to $10,000,000
4% more than $10,000,000

Difficulty Of Finding Capital

Entrepreneurs were asked to rate the difficulty of finding capital, 1 -- very difficult, 5 -- very easy. Unfortunately, the most sought after funding, that from private investors, was the most difficult (1.7) for entrepreneurs to obtain. Venture capital was rated difficult (2.0) as well. All forms of capital were viewed as difficult to obtain, however, in varying degrees. Bank financing was seen as the easiest (2.4), but that may be due to the fact that many entrepreneurs do not even attempt to look for bank financing until their company has sufficient assets or cash flow to be a legitimate candidate for a loan.

71% of the entrepreneurs who were looking for capital said the process was very difficult or difficult. 50% said it was very difficult. Only 12% thought the process was easy or very easy.

The amount of capital makes a difference in the degree of difficulty. The most difficult amounts are between $500,000 to $5,000,000 with an average factor of 1.6 to 1.7. Unfortunately 55% of the entrepreneurs looking for capital were seeking these, most difficult, amounts.

The least difficult amounts are $5 million to $10 million and less than $50,000 ranked at 2.3, followed by $250,000 to $500,000 at 2.2.

Again, it should be underscored, entrepreneurs viewed any amount of capital as difficult to obtain.

Investment Seed and Start-up Capital

Is there enough investment seed and start-up capital in Arizona?

No. The average response was 1.9, based on: 1 very little capital available, -- 5 substantial capital available. Entrepreneurs believe there is definitely a shortage of capital for early-stage companies. Nearly three-fourths of the respondents responded with a 1 or 2 for this question. Only 2% believe that there is substantial capital available.

45% responded with "1", very little capital
29% responded with "2"
20% responded with "3"
4% responded with "4"
2% responded with "5", substantial capital is available.

Entrepreneur Recommendations To Make The Process Of Finding Capital Easier

The top three most often mentioned recommendations are also the top three most critical factors to success.

These recommendations are in the order of most mentioned. *

1. Attract More Early Stage Venture Capital And Angel/private Investors To Arizona *

2. Have Networking Events More Focused, More Often, With Improved Access To Investors *

3. Education Events/resources And Mentoring Assistance Targeted To Entrepreneurs *

4. Angel/private Investors Should Be More Sophisticated, Knowledgeable And Active. *

5. The Public Sector Should Be Supportive Through Incentives And Providing Funding Sources *

6. Go Outside Arizona Or Leave Arizona To Find Capital *

7. Develop Matchmaking Resources To Help Investors And Entrepreneurs Find Each Other *

8. Improve The Economy *

9. Don't Know

Selected comments by entrepreneurs are in quotes below each recommendation. The number of quotes doesn't reflect how often the recommendation was mentioned. *

Attract More Early Stage Venture Capital And Angel/private Investors To Arizona

"We need early stage VC firms located in Arizona that are actually willing to INVEST in Arizona companies."

"More venture capital investors in Arizona and possibly another AZ Venture Capital Conference per year that can bring in more qualified investors. Arizona has some super companies with great potential if properly funded."

"I believe it is necessary to attract more seed and early-stage venture capital firms to Arizona."

"Real Venture Capital investors interested in Arizona opportunities. This should include both traditional venture capitalists as well as other institutional and individual investors. The AVCC has been around a long time, and I've participated twice."

"Develop funding sources, and don't waste entrepreneurs' time on venture conferences that don't connect with them. Solicit, establish and manage funding pools from key AZ businesses, the State, municipalities and angels." *

Have Networking Events More Focused, More Often With Improved Access To Investors

"More networking events that put investors together with companies looking for capital."

"Provide more open access to angel investors."

"More organized way to get at potential investors. Programs with local universities and organizations that connect funding sources and entrepreneurs seeking funds."

"More access to seed capital sources."

"Provide an opportunity to talk in depth with potential investors rather than brief encounters."

"Bring together - in small groups - organizations who are willing to invest in start up businesses with AZ entrepreneurs in Arizona and make the meetings less formal, more informative and more productive." *

Education Events/resources And Mentoring Assistance Targeted To Entrepreneurs

"Credible place to go to be coached, directed, and supported throughout the process."

"More information on how to legally raise capital (for small business)."

"Educational interaction between entrepreneurs and investors."

"Business plan mentoring."

"Clear understanding of the information investors need to make a decision." *

Angel/private Investors Should Be More Sophisticated, Knowledgeable And Active

"More sophisticated investor community locally."

"More sophisticated investors instead of real estate, bankers, and insurance types."

"Angels that actually invest."

"More active participation of High Net Worth (Arch Angels) individuals." *

The Public Sector Should Be Supportive Through Incentives And Providing Funding Sources

"Present State government leadership is weak, as it seems to be opposed to any assistance in making it beneficial for investment in this State."

"Basically, an organized state-wide program would be best; at very least a metro-Phoenix program."

"A state fund that is large enough to support the number of entrepreneurs and readily available."

"Within government control: proactively and strongly promote AZ as a state with a vibrant environment for business growth (ala Silicon Valley and our own Tech Oasis initiative) not just a 'resort' destination."

"Public/Private-sector partnership to encourage, grow and/or promote development of VC programs and related suppliers in Arizona."

"The state needs to attract serious venture investors."

"Government established venture funding or support for funds."

"Have the state pension funds support the local VCs so there is more money available." *

Go outside Arizona or leave Arizona to find capital.

"Can't find the VCs in Arizona. Had to take the company to California for the talent, and access to the funding."

"Start your search outside of Arizona."

"I've moved our start-up to California. By doing so, we've been able to attract funding. Arizona is not viewed as a viable location for a start-up." *

Develop Matchmaking Resources To Help Investors And Entrepreneurs Find Each Other

"A central place (web site) for companies to put information about what they are doing and seeking, investors to place what kinds of investments they are interested in making."

"My solution is to create a '' kind of web site for the busy investor and the busy company trying to establish a relationship."

"A structured process and location (web site where investors congregate and review investment opportunities) for Arizona entrepreneurs to submit, manage, and distribute opportunities for capital investment". *

Improve The Economy

"I think the general economy has made things harder." *

Don't Know

Assistance To Entrepreneurs

Mentors and Guidance

Most entrepreneurs (61%) thought that they had been able to find appropriate mentors. This result is extremely favorable for Arizona's entrepreneurial climate. We have an abundance of talented, experienced business people willing to assist the next generation of entrepreneurs.

State and City Support Programs

Not many entrepreneurs, only 26%, used any of the state or city supported programs for entrepreneurs, such as one-stop centers, Small Business Development Centers, and training tax credits. The most common reason given (47%) was that the time was not worth the effort to participate. However 41% said they were not aware of the available programs.

Professional Services Satisfaction

Respondents that had used a service were asked to rate the quality of services from professional firms located in Arizona from 1 -- very poor, to 5 -- outstanding.

The percentage of usage reflects how many of the survey participants rated the category, the point score is the average score, (the higher the score, the higher the level of satisfaction), and the ranking is based on how high the score was for that service.

Overall Arizona entrepreneurs seem to be very satisfied with the legal and accounting professions, and most entrepreneurs use those services as well, as Table 6 shows.

Law firms were rated the highest professional service and the most often used. Accountants were second in place in satisfaction but only by one tenth of a point. They were also in second place as far as usage. 56% of the respondents ranked law firms and accountants as a 4 or a 5. Law firms were ranked outstanding, a 5 rating, by 28%, and accountants by 19%.

It is generally recognized as critical for entrepreneurs to get comprehensive legal and accounting advice right from the start-up stage of their company. The fact that a significant number of entrepreneurs said they have not used attorneys (17%) and accountants (23%) is indicative that these entrepreneurs did not know how to find an appropriate advisor, or viewed these services as too costly.

Technological Systems Assistance, Business Planning Services/Management Consultants and Management, Leadership, Employee Training were ranked about average with a 3.1 or 3.0 rating.

There was some dissatisfaction expressed with the services of Human Resources/Recruiting, Marketing Firms and Public Relations firms but just marginally.

The greatest level of dissatisfaction was expressed for Intermediaries/ Finders/Corporate Finance Consultants. 55% gave a rate of 1 or 2, only 19% gave a rating of 4 or 5. These professional services also had the lowest level of usage by entrepreneurs as well.

The Media

Entrepreneurs were asked if they felt the media in Arizona -- newspapers, magazines, TV and radio -- are supportive of the entrepreneurial community. In other words, did they feel that the coverage and stories were important to entrepreneurs? The rating was from 1, no support, to 5, very supportive.

2.6 was the average response, indicating entrepreneurs were somewhat dissatisfied with the coverage and support from the media. Nearly 50% responded with a 1 or 2 to this question. They weren't sharply critical of the media, on the whole, however. 28% were a neutral "3" on this question, and 23% gave the media a positive 4 or 5 rating.

Quality of Management Talent in Arizona

There was little consensus on this question. The average score was a neutral 3.1.

4% rated management very poor, 1
21% gave management a rating of 2
44% voted 3
27% voted with a favorable 4
4% rated the management talent outstanding, 5

Entrepreneurs believe there is room for improvement in the management talent available in the state, but the problem is not seen as severe.

The Role of State Government in Arizona To Nuture A Strong Entrepreneurial Community

What do entrepreneurs want?

When asked what the role of state government should be to nurture a strong entrepreneurial community, entrepreneurs had a number of suggestions. The suggestions given in order of frequency were:

Bring More Corporate Headquarters to the State

More Information and Assistance to Entrepreneurs

Change the Taxation System, Simplify Regulation

Incentives for Starting and Investing in Companies

Change Focus of Economic Development Efforts

Stepped-Up Public Relations/ Media Activity

Improve the Educational System

Selected comments by entrepreneurs are in quotes below each recommendation. The number of quotes doesn't reflect how often the recommendation was mentioned.

Bring More Corporate Headquarters to the State

"Work with economic development groups to bring corporate headquarters to Arizona and stop considering call centers a 'big win' for economic development."

"Attract headquarters of Fortune 500 companies to provide the demand for emerging technologies and services and to bring talented top management to the state."

"Encourage big business. If entrepreneurs fail, they like to know there are alternatives for work. They also need to know that maybe their service or product can be sold locally. It's certainly easier to network with big players when they're just down the street."

"The Government needs to attract the large businesses to Arizona. This will bring in skilled and intelligent individuals to help build the infrastructure of the entrepreneurial community. The government should attract these businesses with tax and land incentives."

More Information and Assistance to Entrepreneurs

"When registering a new company more information should be provided on how to work/sell to the city or state. Many new companies fail because they are not aware of the opportunities that the cities and states provide for projects. For example, a 'doing business with the state' packet would be very helpful to a start-up."

"Populate the business development offices with people who have actually built and run companies."

"I think the government employees need to be more knowledgeable and know what is going on. There is a lack of communication between government agencies and the employees don't want to help you. If we can't get information and answers from them, where do we go?"

"Conduct formal focus groups with the entrepreneurs in the valley. Many of us are unclear as to what is available to us. You know how the saying goes often times 'you don't know what you don't know' and this can be crippling to a small business."

Change the Taxation System, Simplify Regulation

"Provide equal taxation for all businesses. The large business should pay the same percentage as the small business."

"Cut down on paperwork for the smaller business (less than 10 employees). An under $1M company with 4 employees shouldn't have to do the same amount of paperwork as a $50 M company with HR department and CFO."

"Level the playing field by cutting out large corporate welfare and tax breaks that cause small businesses and individuals to pay more than their fair share of taxes."

"RAISE TAXES, if necessary, to invest in education; arts; better city planning and land use; environmental protection; historic preservation; public transit; and other quality-of-life indicators. We need bright, energetic, committed political leaders who will take a stand on these issues. Ultimately, we need to do a better job of attracting and keeping people who can help build our communities for the long run. Cheap land, inexpensive housing, and disengagement from community involvement is a recipe for stagnation and decay."

"Stay out of the way."

"Decrease taxes."

Incentives for Starting and Investing in Companies

"Increased tax incentives for early stage companies, incentives for training (especially in technologies)."

"Give established businesses tax breaks if they use vendor entrepreneurial startup companies. Enable entrepreneurs to introduce new and innovative products to the state procurement system-this is a nightmare at present."

"Provide stronger tax credits and other incentives. For example, public monies have been used to finance infrastructure for large companies, sports facilities and tax credits for land and other incentives. They just are simply not available for small business."

"Bring the capital to AZ venture capital firms, encourage private investment - maybe through tax breaks to investors."

"Tax incentives for early years of a company's development."

"I believe the Arizona government should give incentives (e.g. tax incentives) to investors to invest in startup companies that could bring tremendous wealth to the state of Arizona."

"Reward angel investors who invest in local companies with some sort of incentive."

"Provide more benefits to small growing companies that create jobs and generate tax income for the state. Training assistance, publicity, incentives, etc."

"Lower taxes, incentives for state institutional funds for investment in local VC firms, less embarrassing brain-dead policy and political positions."

Change Focus of Economic Development Efforts

"Focus all efforts on three emerging industries that are currently low level of revenues but have huge potential, and where AZ could create a competitive advantage."

"1. Identify key industries that Arizona wants to grow.
2. Focus all available Arizona state, educational & industry resources on development and expansion of those identified industries."

"Target selected 'high value' industries and support their development through universities, etc."

"Encourage senior level talent to stay in the community once they are brought from another state. This can be done by stopping the focus on valuing real estate investors over business development investors."

Stepped-Up Public Relations/ Media Activity

"Promote coverage through press releases. Start the 'built in Arizona' campaign, very much like Colorado has done."

"Promote the state as a 'entrepreneur-friendly' environment much more strongly outside the state."

"State government can create a public relations campaign aimed at bringing attention to Arizona's entrepreneurial community. It has done this with industry clusters to some extent. However, the State could create a more focused goal of getting Angel, VC, and Institutional investors to look to Arizona more frequently, then that would be a good start. If the State could get more VCs to open Arizona offices, that would be very helpful."

"Create the public relations blitz that will, at least, cause some investment capital to turn their eyes to Arizona for opportunities."

Improve the Educational System

"The state needs to address our severely lacking educational system that is not even coming close to producing the talent of people we will need in the future."

"Replace the board of Regents --- the University system does not support the business Community."

"Improve the technology transfer programs at all the state universities."

"Concentrate on improving the public educational system to make it the best in the nation instead of the worst."

"Start teaching pro-business items in school, and not the current anti-business propaganda. It would also help to not have one of the bottom 5 public school systems in the country."

Direct Involvement by State Government

"Convert the Department of Commerce programs from a 'banking attitude' into a venture capital attitude. Currently Arizona requires that a business be in profitable operation for 2 years in order to benefit from any of the grants, loans and business tax incentives offered. This attitude will not ever foster the proper growth and support environment for high risk/high return start-ups."

"Create a state early seed fund to assist start-up companies."

"Instead of all this investment in sports stadiums in AZ, how about state sponsored venture capital funds for serious AZ start-ups?"

"State government talks a good story, but has had very little positive action. They have been arguing for years about creating a state supported venture capital program. We're still waiting. The state has not really been pro-business since Symington left office. Every time we try to institute a program to help attract or grow business, the anti-business loudmouths and their 'giving money to the rich' rhetoric win out."

"Actually DO more business with entrepreneurs, not just give it lip service."

"It starts at the top. The Governor should be pro-business and pro-business development (like Utah) then mandate that the state pension funds invest in local venture capital funds so there is more money available. Create a state-backed venture capital fund to aid in technology transfer and accelerate entrepreneurial growth."

"Become a champion for building a viable, thriving knowledge based economy starting at the governor's level. Recognize that a knowledge economy is the future of this state if it is to remain competitive nationally and globally."

"Like education, the State should treat entrepreneurial enterprise as a key resource, which must be proactively developed, and linked by policy to the economy. Funding in this area should be treated like an investment in the State's economy."

Better Capitalize on Current Opportunity

"There is no focus on Information Technology, yet my friends from Silicon Valley are very envious of the lifestyle and potential...and wary of this area's ability to capitalize on it."

"There's no reason Phoenix shouldn't be able to become another Silicon Valley. We've got great schools, easy transportation to CA, affordable cost of living, and talent from Motorola, Intel, Honeywell, General Dynamics, etc. I'm looking at leasing development space for $0.80 sq. foot vs. $3 to 5 in San Jose. Housing is 1/3 or less than San Jose. Now is the time for AZ to start pushing to get the next wave of entrepreneurs and replace jobs being lost as the big companies cut back."

Listening to Entrepreneurs

"Enlarge the circle of business leaders who are consulted for their opinions--so often, 'community leaders' cited are a tired list of executives from large corporations, often blind to the realities of more entrepreneurial business people."

"Starts with commitment to do so, and after that, learn what that means to be supportive and nurturing. This survey is a good start to listen to the community, and if the State actually listens, and is committed, good things might happen!"

Other Important Issues To Entrepreneurs

In an open ended question entrepreneurs were asked "Anything else that you would like to tell us about issues that are important to you, as an entrepreneur in Arizona?"

The four most frequently mentioned responses address the issue of strong business leadership for Arizona, from media organizations, and leaders of business development organizations, in enhancing the state's entrepreneurial image, and in direct support of emerging enterprises from large businesses in the state. *

Increased Media Coverage for Arizona's Entrepreneurs
* Better Organization of Resources for Entrepreneurs
* Develop Arizona's Potential
* More Large Company Support Other frequently mentioned responses: * Use Other States As Models
* Reduce Tax and Regulatory Burden
* Tech Transfer from Universities
* It's All Up to the Entrepreneurs

A sampling of comments:

Increased Media Coverage for Arizona's Entrepreneurs

"I feel more coverage of local business should be pursued by the local newspaper and TV stations. They do a good job of covering new restaurants but do little to nothing covering the local mechanic, painter, toy manufacturer and even a web site management company that is little more than one year old and growing. A position in the business section of the Arizona Republic on emerging companies would do wonders for the community and the support of local establishments. I often hear all the jobs and projects for local people and business go out of state. It is time to bring the focus back to building Arizona commerce."

Better Organization of Resources for Entrepreneurs

"We have an abundance of service providers, some excellent some very poor, but very little PEER help for technology startup companies. Silicon Valley has taught us that when companies work with each other, everyone can make money. Again, it seems to go back to the poor self image."

"So far, it seems that everyone is on their own without a great deal of support systems in place. It's getting better -- Enterprise Network, NAWBO, Women President's Organization, etc., but it was pretty bleak a few years ago."

"I feel that there is more private capital in AZ than I could ever need, but I have no efficient way to get at it or identify and talk to the investors who have the capital."

Develop Arizona's Potential

"Arizona has immense potential. We are underselling ourselves. Here we are next to California with the 5th largest economy in the world and we have failed to take advantage. We represent lower operating costs, available resources such as land and labor and a very favorable cost of living. We have 3 highly respected universities graduating thousands of talented individuals each year, yet we complain we can't attract top talent."

"Arizona's PR image is more of a tourism capital than a tech center. The state government needs to agree on what its focus is. If it wants to attract business, it needs to focus more on that image, and less on the resorts and golf courses available in the state."

More Large Company Support

"The big companies in Arizona also pay a lot of lip service to how much business they do with small business and how much money they put into organizations like NAWBO; but I have not seen, nor have many of my small business associates seen any real tangible business from any of these big businesses nor the City, Counties or State."

Use Other States As Models

"This state is still in the dark ages in support of entrepreneurial businesses. We should look long and hard at states like Colorado and Texas and the ways they used to create strong business centers."

"I've had a chance to visit other states and learn about the investment community elsewhere. Arizona's appears to be fragmented while others seem to be coordinated and focused. Though some duplication of effort is inevitable, Arizona appears to lack a coordinated program to encourage new business to start and grow here. So many of the startup businesses need mentoring, as I've learned by being on the Advisory Board of more than one. Some locations are coordinating efforts to create entrepreneurial or technological centers for startups."

Reduce Tax and Regulatory Burden

"As a small business with fewer than 5 employees, the high sales tax and unemployment tax rates are hard to handle. Also, high medical insurance premiums make it impossible to offer a benefits package to employees."

"Tax structure is against small business, most local government elected officials are anti-business and direct their major concern toward environmental issues. If there is no business growth, there will be less tax money to fund all the pet environmental projects."

Tech Transfer from Universities

"Encouraging Tech Transfer from the state universities would be a critical issue. In particular, the focus should be on encouraging the creation of new businesses in Arizona rather than on merely licensing the technology to firms, many of which will be from out of state."

It's All Up to the Entrepreneurs

"Gotta do it ourselves. We have a wonderful competitive advantage in the climate and quality of life. We have an embarrassing state government and a news media that wouldn't know an entrepreneur if one bit them."

"I don't believe that there are problems raising money in Arizona - I think that a bunch of poor business people are trying to start businesses and complain because they can't get funding. We have plenty of poorly managed businesses (high tech) in Arizona and it's time for a change."

"I will probably remain in the state for at least another 20 years. Therefore, I HAVE to make the best of it! I have an excellent attitude regarding my business and HAVE to maintain that until I can afford to retire (or rather die trying!)."

The End

Copyright 2002, Profit Dynamics, Inc,.
Dee Power & Brian E. Hill
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