Tag Archives: H.E.A.T.

ACA helps foster manufacturing matchmaking

“‘What is the overview of manufacturing in the U.S. and Arizona?’ That’s the question no one is asking. It’s a landscape of profound changes — especially for manufacturers who up their game and move up the value chain.”

Brian Sherman is filled with enthusiasm. As the senior vice president of business development for the Arizona Commerce Authority, he is the manufacturing “yenta” for the state’s official economic development agency; a “yenta” being a marriage broker hooking up couples perfect for each other.

“My No. 1 goal for 2014 is bringing together well-established manufacturers with business experience and an eye on growth with the young entrepreneurs who are building businesses from ideas and need prototypes and business acumen,” says Sherman. As the designated matchmaker, Sherman and his team have a new role at Arizona Commerce.

“Arizona is a land of innovation, and that’s what gives us an edge for manufacturers,” he says. “The day of business sitting back and waiting for orders is over. ‘Cranking it out’ has moved offshore, and businesses competing in that marketplace are going to get hit hard on price points.”

“Where a small- or medium-size manufacturer is going to succeed is with technical solutions and not just products. Innovation is what makes this state great,” Sherman’s on a roll. “We’ve got well-established manufacturing businesses aligned with our key sectors—but those same businesses could move into parallel sectors and grow even more. That’s what our team at Arizona Commerce is doing. We’re positioning these businesses for the next trend.”

Parallel sectors: Family classics meet Generation Z
“We have classic family manufacturers across the state. They’ve been around for decades; some for multiple generations. The make stuff.” Sherman calls them ‘salt-of-the-earth’ companies. “They’re starting to feel some of the pressure of the sequestration and recognizing that depending on defense or government is not the road to the future.”

“Then we’ve got these young entrepreneurs. They want to write code. They want to make games and apps,” he enumerates the issues. “They think manufacturing is stodgy, dead end and offshore. But they don’t really see the full picture. They’ll tell me, ‘yes, I have this vendor over in Taiwan and he’ll make this.’ Trying to prototype a product from 10 thousand miles away doesn’t let you see how it’s going to be built.”

“Back at the small manufacturer, let’s say it’s an aerospace or defense business. That’s high-precision work. The skills going into what it’s making now can be adapted into other high-precision manufacturing—like biomedical devices.” Sherman’s enthusiasm is contagious. “So we take the tech startup and the established business, bring them together and show the young entrepreneur that manufacturing can be pretty sexy. We show the manufacturer that the tech startup has the innovations and ideas that can be adapted for future growth.”

RevAZ: Arizona Commerce Authority consulting services
Sherman’s teams at Commerce work with manufacturing businesses as consultants — and in some cases bring in outside consultants — to help businesses transition into the next economy. The service is designed to revitalize Arizona manufacturing. “Rev AZ is just a phone call away,” explains Sherman. “We show how innovation, diversification, and shared knowledge helps companies position for trends and profitably grow. We bring in the experts to help businesses manufacture — both new and old.”

Back to that prototype, he says, “If the tech startup can have the prototype built here, it gives the view of how the production floor needs to function in order to turn out the product. It brings the new generation of innovation and technology into the experienced hands of our existing manufacturing businesses. It also opens new sectors for old business.”

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Now is the time to invest in Arizona

It used to be when I traveled to different business meetings across the country, people would ask me about Arizona’s politics. While we still have reputation issues to repair, the questions I’ve been getting recently are more focused on the buzz they’re hearing about our growing technology sector.

There’s good reason Arizona is getting noticed for its growth. Over the last five years, Arizona has developed one of the most robust technology entrepreneurial ecosystems in the country. The state is home to five of Deloitte’s 2013 “Technology Fast 500” firms, specifically First Solar, LifeLock, Telesphere, Inilex and GPS Insight. Other startups that have been home grown in Arizona into industry leaders include Axosoft, GoDaddy, iCrossing, Infusionsoft, Insight Enterprises, LimeLight Networks and WebPT.

We were able to accomplish our strong entrepreneurial spirit in part by drawing the attention of the media and the state’s policy makers to the need to diversify our economy away from construction and climate into a knowledge-based economy with higher paying jobs. Our efforts resulted in a tax credit for qualified research and development that is the best in the nation and a successful angel investment tax credit.

A lot of other resources have been invested. Over a dozen business incubators and accelerators call Arizona home, providing resources to support technology entrepreneurs. In addition to graduating a vibrant workforce to fuel quality jobs, Arizona’s world-renowned universities and community colleges are also heavily engaged.

Arizona State University (ASU) runs the Edson Student Entrepreneur Initiative and the ASU SkySong Innovation Center was recently awarded one of the best organizations of its kind in the country. University of Arizona (UA) is helping create the technology of tomorrow in its Bridges/UA Bio Park and UA Tech Park that includes a Solar Zone. UA also participates in Startup Tucson – an organization dedicated to growing a vibrant ecosystem of entrepreneurship through educational events. Northern Arizona University fosters business growth through it Center for Entrepreneurship and Technology and benefits from its affiliation with NASA. All of that bodes well for Arizona’s innovation economy.

Other efforts are focused solely on exciting people about technology and science. We just celebrated the third annual statewide Arizona SciTech Festival with over 300K people attending more than 500 events this year.

And although we have a long way to go, there’s a growing pool of capital. We’re home to two of the largest and top rated angel investor networks in the U.S. ─ ATIF and Desert Angels. The Arizona Commence Authority has created the Arizona Innovation Challenge that awards the most money in the country to the most promising entrepreneurs meeting technology challenges. Grayhawk Capital just raised $70 million in funds for early and growth stage technology investments. And Tallwave Capital recently announced it has deployed $500,000 in capital in early-stage ventures.

The 2010 census reports Arizona’s population at 6.4 million, with a median age of 35.9 years. The predicted growth rates for Arizona by the federal and state government expect that between 1.5 million and 3 million people will move to Arizona by the year 2020. That type of robust regional population growth combined with an improved U.S. economy translates into high potential for investors.

It’s true we enjoy more than 300 days of sunshine each year. But we offer a lot more than golf and spas. Venture capital sitting on the sidelines should put money into promising Arizona high tech firms and startup ventures.

Now is the time to invest in Arizona.