$100 million on table from Tucson-based venture capital funds
Tucsonans with an idea for a product or service that could be commercialized may not have to go so far for funding anymore.
Within the past year, metro Tucson has seen the creation of three investment funds offering about $100 million in venture capital to help inventors here and throughout the Southwest get their products off the ground and create companies to sell them.
The buzz of suddenly getting so much potential money prompted about 150 business leaders, educators and a few politicians to come together Tuesday afternoon at the Southern Arizona Innovation Economy Forum at Hacienda del Sol Resort to plan how to take advantage.
Speakers included Robert Robbins, the University of Arizona president; Sandra Watson, president and chief executive of the Arizona Commerce Authority, the state's key economic development driver, and Eric Cromwell, a Nashville-based expert on venture capital and economic development.
Ron Shoopman, chairman of the Arizona Board of Regents and past chair of the Southern Arizona Leadership Council, said he hasn't seen so much optimism among Tucson leaders in about 15 years.
The Leadership Council was one of the sponsors, along with the Commerce Authority, Flinn Foundation and University of Arizona.
But getting an infusion of about $100 million doesn't mean a bunch of jobs will suddenly pop up. Growing an idea into a product and then into a company with a lot of workers can happen quickly or it can take years or decades, said Cromwell.
In addition to money, it requires persistence and patience and especially innovation, he said. But one of the rewards can be higher-paying jobs.
"The companies that will be creating jobs going forward will be more driven by innovation, meaning they'll be developing some type of technological innovation, some new system, some new service. It doesn't have to be the next technology," Cromwell said.
Companies and organizations that get venture capital are carefully vetted to make sure they have a good potential for success. In some cases, the venture capitalists just loan money and are passive and in other cases they can become partners or managers.
Getting venture capital has never been easy for Tucson start-ups, and they often had to go to Phoenix or out of state. It could get easier now.
Mara Aspinall, managing director of Bluestone Venture Partners in Tucson, said the new venture capital sources here are:
And that is not counting venture capital companies already in Tucson or those based elsewhere that serve the Tucson market. Aspinall said Arizona companies are offering a total of about $450 million
Tucson's weaknesses and strengths
Unfortunately, while the money infusion will help, speakers pointed to a number of weaknesses that can hurt metro Tucson's ability to build or attract new companies.
Several speakers pointed to public schools that are generally perceived as not as good as they should be.
Aspinall said, "Unless we have real and perceived strong K-12 education, I will say we are not going to get millennials with three- and four-year olds to move here."
Ryan George, chief executive officer of Simpleview, an Oro Valley-based company that sells software to about 600 convention and visitor bureaus in the world, said he has seen skilled people leave the Tucson area because they weren't happy with the schools.
"That is a slippery slope that makes it hard to attract talent as we attempt to grow these businesses," he said.
Others pointed to bad roads and a relatively small airport that needs more flights. Robert Brown, director of public affairs for TuSimple, said its Tucson-based employees too often have to drive to Phoenix to catch flights. TuSimple is a Chinese company that is building autonomous trucks in Arizona. It has about 50 employees now and Brown said it hopes to have 500 to 600 in two years.
McCusker, who is also chair of the Rio Nuevo development district that is improving Downtown Tucson, said another thing that can hurt is a continuing controversy over whether municipalities and Arizona can offer incentives to attract companies. "We have a long way to go in terms of how to incentivize, particularly young startups," he said.
But speakers also pointed to number of strengths that metro Tucson offers, including a good quality of life, low cost of living and especially the University of Arizona and Pima Community Colleges. Brown said the optic and other high tech programs at the UA and truck and diesel mechanic programs at Pima College have been invaluable.
Robbins said the university has a research budget of about $600 and excels in optic science, space and astronomy and is considering branching out more into brain and immunology research, all areas with commercial potential.
The university is devising a new strategic plan to be presented to the Board of Regents in November, and Robbins said one pillar will probably be increased economic development assistance to metro Tucson.
"Having a research university with a $600 million (research) budget is a very key part for economic development in any region," Robbins said.
George said Tucson offers a lot of talent, not only because of the university but because of skilled spouses who come with Raytheon, Davis-Monthan AFB and other large employers. "We've been able to have some of the best talent in the world at maybe two-thirds the cost," he said. Several speakers lauded Tucson for still being small and cozy enough to be helpful and friendly to newcomers.
Brown said that when TuSimple was considering a move from California to Arizona, officials were delighted to get quick and responsive help from economic development groups in Tucson and Phoenix, such as Sun Corridor Inc.. "You guys had one voice," he said.
"Even though Tucson is the little brother of Phoenix, the warmth and drive and intellectual capacity of the city is exponential," he said.
Jen Watson Koevary, chief operating officer of Avery Therapeutics, a UA startup started in 2014, said "Tucsonans, they always pick up the phone and help you find what it is you are looking for."
Avery is creating cell-based treatment for heart problems. Koevary said the goal is recognize problems within the heart before they erupt into symptoms, which treatment can be too late.
Those are just a few of the companies innovating in Tucson after somehow scraping up the funds. Another is Emagine Solutions Technology, a company that is developing a product that will enable doctors to use smart phones or tablets to perform remote ultrasounds on pregnant women.
George said the amount of creativity and innovation here can surprise outsiders. While trying to attract investors over the 22 years his company evolved in Tucson, he flew in many investors and many said they had no idea.
"(They would say) I never knew Tucson was this big. I never knew there were companies like yours in Tucson. I never knew that this company or that company was here."