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 'matchmaker.com' 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." *