The State of Arizona’s Technology Sector
October 25, 2016
President & CEO, Arizona Technology Council
In 2016, Arizona’s technology sector has arguably seen its most successful year-to-date. The state has more jobs in technology; our educators are focused on teaching science, technology, engineering and math (STEM); and there are positive signs for increased venture capital opportunities. Looking ahead, the Arizona Technology Council anticipates 2017 to be an even more productive year than 2016.
Arizona’s tech-driven reputation continues to expand both at a local and national level from many notable entities. Here are a few examples that illustrate Arizona as a top tech state:
- CompTIA’s 2016 Cyberstates report highlights that there are now more than 135,000 tech industry jobs in Arizona. This means 61 of every 1,000 private sector workers in Arizona are employed by high-tech firms.
On a national level, Phoenix metro is ranked third by CBRE’s annual research report “Scoring Tech Talent” for tech job growth among large, U.S. markets.
- For the second straight year, U.S. News & World Report ranked Arizona State University (ASU) No.1 among the Most Innovative Schools in America in 2016. ASU ranked higher than Stanford University receiving a second place position.
- At the high school level, BASIS Scottsdale and BASIS Tucson North were listed on the Top 10 list for 2016 Best STEM High Schools by U.S. News & World Report. Arizona has experienced significant growth and support with STEM education programs.
- Arizona’s venture capital investment total of $123 million in the first half of 2016 alone surpassed the $119 million invested for the entire year in 2015, according to Thomas Reuters, an industry-specific data research company. End of 2016 year projections show that this number will remain largely unchanged, in part, because of the lack of funding in the Angel Investment Tax Credit Program.
Technology activity underway indicates many of these same trends will continue for Arizona in 2017. The areas of emphasis for Arizona’s technology industry growth will be on increased capital for startup opportunities and job creation.
There will be a heavy emphasis on recapitalizing the Angel Investment Tax Credit program in 2017.The objective of the program has been to expand early-stage investments in high-growth potential Arizona small businesses. This goal was accomplished by eliminating Arizona capital gains tax liabilities associated with the disposition of investments in small businesses certified by the Arizona Commerce Authority (ACA). More than $420 million in financing is attributed to this program in addition to the $62 million raised through credits for investments. However, recapitalization of this tax credit is key since the program ran out of funds in mid-2015, leading to a stall in investments.
If recapitalizing the Angel Investment Tax Credit program is successful, Arizona can continue to grow its available seed and early-stage risk capital for startups. State legislation passed in 2016 takes advantage of the Small Fund Exemption of the Dodd-Frank Act and encourages more venture funds to start in Arizona by leveling the playing field. The Council’s Public Policy Committee has been hard at work on this initiative.
In the spring 2016, the ACA held its annual Arizona Innovation Challenge – attracting more than 1,000 startups since its inception – with companies vying for investments of $100,000 to $250,000 ($3 million total available per year). Many of these startups will now have the opportunity to grow and create jobs in the state. This event has helped fuel the positive momentum of technology job creation, which is expected to carry over into 2017.
The emergence of technology sectors such as FinTech, MedTech, EdTech and software is helping to bring more technology jobs to Arizona. The software industry merits special attention. In August 2016, former Infusionsoft CMO Greg Head initiated “Gregslist,” a compilation of Arizona-based software companies published at www.greghead.com. As of October 10, 2016, the list showed a total of 187 companies. More importantly, there are roughly 18,000 jobs available within these companies, with more startups joining the list weekly.
The technology outlook for 2017 is strong. Many factors suggest 2017 may be Arizona’s most robust economic year since the end of the Great Recession.
Steven G. Zylstra Sc.D. (Hon.) serves as president and CEO of the Arizona Technology Council, a role he assumed in December of 2007. He is responsible for strategy, operations, all financial matters and accomplishment of policy development for the Council. Steven is a vocal spokesman for the value technology can provide in raising social and economic standards in Arizona. Steven has served in numerous technology leadership and advisory roles to the Governor and currently serves on several association, industry and community boards, including being recognized as an Aspen Institute Fellow for his work in workforce development. Between August 2013 and August 2015 he served as the Chairman of the global organization Technology Councils of North American (TECNA). Steven can be reached at 602-343-8324 or at email@example.com.
Real Estate & Business Forecast Seminar
FRIDAY, NOVEMBER 18, 2016 – 9:00 AM TO 12:30 PM
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