Business ecosystems are a balancing act of supply and demand from a variety of players including startups and investors. There is a fine line between having enough money in the community for all the startups to be funded and not enough money for anyone to get a project off the ground.
In Phoenix we have a high demand for investors and a large supply of ingenious startups that are looking for funding. Luckily, this demand is being met in large by investors popping up around the valley and other surrounding states. The southwest has made itself known as the place to be for investors and venture capital firms. In 2015 alone there were over $35 billion in investment deals in the southwest. Phoenix played its part in that success – raising $113 million alone.
In case you were wondering… yes, there is money in Phoenix
Phoenix is the fifth most populated city in the US and home to brilliant, hardworking entrepreneurs, so naturally it would be a destination for investors and startups alike. A big misconception about Phoenix though is that there isn’t any funding available in town. This couldn’t be more false.
The money is multiplying as investors realize Phoenix is a growing hub for all things tech and innovation. But like anything in the midst of growth, there are pains and processes that need to be worked out along the way. Startups need to be prepared for the hard questions and a (sometimes) longer road to funding than they expected. Only the strong, well prepared and investment worthy will survive.
Founders that are considering funding, need to educate themselves on what investors are looking for and know what options are available in their own back yard. There are organizations and resources like Invest Southwest, The Arizona Commerce Authority, or the Arizona Tech Investors Forum and Desert Angels that are dedicated to finding the right partnerships between startups and investors. In addition, there are numerous sites that list resources and places to find the right investor such as this Tallwave map of U.S. investors.
The bottom line is that the money is here, but it takes time and research to find the perfect fit.
Investors don’t care about you… yet!
This is where I tell you to make them care about you, to be memorable, to make yourself and your company stand out among the crowd. After all, investors get hundreds of emails a day and probably have ten different neighbors that have a “great business idea.”
That means you have a lot of competition—but if you need the funding, instead of complaining about the system, learn how to work the system. Once you actually manage to grab the attention of a funding outlet, it’s time to let your personality and product shine.
Investors are looking for a great business to invest in, but they are also investing in you, the person. It’s your job to make sure the value of the entire package is very clear – and done in a concise, intellectual and memorable way.
The first and best way to gain the respect of investors is to perfect your pitch. Then, if you are lucky enough to get a meeting with an investor, be sure that you are prepared. There are numerous resources and local mentors who know the investor world and can help you prepare and set realistic expectations if this is your first go around.
Investors are here to stay
Entrepreneurs (and great ideas) are everywhere in Phoenix. Everyone wants a piece of the entrepreneurial pie, but there is a dark cloud of fear thinking that investors will take their money elsewhere. Sandra Watson, Arizona Commerce Authority President and CEO, doesn’t think so.
“Investors are definitely here to stay in Arizona. We have seen a rise in angel investors as well as venture capital firms and investment banks calling our state home for new offices and branches,” said Watson.
Phoenix is full of bright, hard workers, who aren’t trying to be the next unicorn startup.
Continued funding news and increased growth of our local success stories are proof that Phoenix has already begun to make its mark. Our local community has stepped up to the plate over the past few years to really foster an environment of success and support. Groups like #yesphx have started an entrepreneurial brotherhood that have given Phoenix the boost it needs to reach for the stars. There is a lot to learn about how investing works and even more about how to get to the finish line. But with the right research, proper preparation and a fantastic idea, your startup can be funded right here in Phoenix.
Karen Katzorke is the Executive Director of Invest Southwest, working with local startups and entrepreneurs.