10 hottest sectors in Arizona’s tech community for 2018

Business News | 15 Jan |

Arizona can no longer be considered an “up-and-coming” technology hub. We have firmly solidified ourselves as a serious contender among the nation’s elite technology centers. In order to continue our community’s growth, we have prioritized investment capital as a key challenge to tackle. Through our legislative efforts, we feel that we are on track in this area as well. 

The Arizona Technology Council has worked hard to accelerate investment in the technology community by advocating for important pro-investment legislation such as the Angel Investment Tax Credit, which gives a 30-35 percent tax credit to investors. Convincing our lawmakers to pass legislation that promotes investment is the final frontier to reaching peak technology output. 

Overall, there are a number of sectors on the rise filled with companies deserving of investor dollars. And while I don’t want to make any specific recommendations on companies deserving of investment, I have broken down the 10 hottest sectors to explore if you’re interested in investing in our state’s technology community. 

Video by Jesse A. Millard

Additive manufacturing 
(3-D printing) 

3-D printing is an industry in which Arizona has proven to be a leader. Arizona State University (ASU) recently opened the Southwest’s largest additive manufacturing research center, the Manufacturing Research and Innovation Hub. The center boasts $2 million in cutting-edge plastic, polymer and metal 3-D printing equipment. Organizations like Phoenix Analysis and Design Technology and Honeywell, are also exploring new ways to develop end-use parts for the aerospace sector with metal 3-D printing. There are a number of innovative technologies developing in this area that will revolutionize manufacturing in Arizona, which is home to around 5,000 manufacturing companies. Additional organizations innovating in the space include Titan Industries, Carbon 3D, Stratasys, and more. 

Artificial intelligence (AI) and machine learning 

A.I. and machine learning will soon creep into every piece of software and connected device imaginable, as many companies are implementing or experimenting with the application. In our state, there is a great deal of research occurring at the university level. University of Arizona (UA) has an entire lab dedicated to this research, which provides hands-on learning for its students, while ASU’s Consortium for Science, Policy and Outcomes is devoting a ton of attention to both A.I. and machine learning. Both of these schools are producing top talent that will apply this technology to future innovations of their own. There are also many applications of this technology in sectors like marketing, with companies like Digital Air Strike implementing new A.I. and machine learning technologies into digital marketing tools, or cybersecurity, where WiZR has developed an industry-leading, AI-based computer vision technology with IoT integrations. 

Autonomous vehicles 

This is a sector where Arizona has really shined. We are leading the nation in the operation and testing of autonomous vehicles after our government paved the way for these innovations. Some of the largest technology companies in the world including Lyft, GM, Uber, Veyo, Intel and Google/Waymo are honing autonomous vehicle technology here in the Valley. As these innovations progress and are proven, the opportunity for this sector to flourish is massive.  

Commercial space industry 

Arizona has been a long-time leader in aerospace and defense, but more recently, we have seen rapid growth in the commercial space industry. Paragon, KinetX, Vector, Orbital ATK and more, have all been leaders in Arizona’s commercial space industry for a long time. As the economic landscape in space shifts from government-led projects to smaller independent projects in the commercial space sector, you will see many of these companies develop ambitious ideas. World View Enterprises is one of the companies making a lot of noise in this area. In early October, the company executed its first balloon liftoff from Spaceport Tucson, the first-ever purpose-built stratospheric launch facility in the world and the home for World View’s “Stratollite” missions to the stratosphere. There is a worldwide race for successfully executed commercial space flights and Arizona’s space sector is a major player here.  

Cybersecurity 

Every year, I lead a group of Council members on our annual D.C. Fly-in where we speak with Arizona’s elected federal officials about technology initiatives in Washington D.C. And every year, cybersecurity is our number one topic of conversation. In fact, Juniper research predicts that cybercrime will cost businesses more than $2 trillion by 2019. Arizona has responded to this need by becoming home to one of the most robust collections of leading cybersecurity firms in the nation including companies like McKesson, Logicalis, BeyondTrust, InfoArmor and SiteLock. In 2014, the Federal Trade Commission ranked Arizona in the top ten for cybersecurity. There is no end to the need for cybersecurity solutions in this day and age and there are plenty of solid opportunities to invest in firms both large and small. 

Education technology (EdTech) 

The Arizona Commerce Authority reported that startups in EdTech have attracted more than $100 million in investments since 2012, with more than 1,000 jobs created. The inclusion of technology to introduce new ways of learning has been an effort championed in Arizona for quite some time, and the industry is growing rapidly. Companies like Parchment, GraphLock Inc. Campus Logic, Picmonic and much more, are leading the way for EdTech in Arizona. I anticipate that additional companies will be created to develop technology solutions for advancing education at all levels.  

Financial technology (FinTech) 

Financial technologies like blockchain and cryptocurrency have incredibly promising applications. For instance, a decentralized exchange system using blockchain would help individuals avoid corrupt and greedy governments in Third World countries. As the sector matures, and Arizona legislators are opening up to exploring the technology, we will see an influx of blockchain companies emerge. FinTech expands far beyond blockchain and cryptocurrency, but this technology is the hottest in the sector at the moment. There are a number of very promising companies currently in Arizona’s FinTech sector including BillingTree, Desert Schools Federal Credit Union, Cardfree and Upgrade Inc., as well as a number of startups with exciting blockchain innovations such as KryptoPal and Sweetbridge. 

Health and bioscience 

Our medical technology (MedTech) sector is rising as the innovation we’re seeing is having a major impact on the growth of Arizona’s bioscience industry. Companies in a number of health and bioscience sub-sectors such as Ventana (diagnostics), Medtronics (medical devices), Mayo Clinic (hospitals), the Flinn Foundation (philanthropy), and more are working towards innovating in and advocating for our health and bioscience sectors by merging technology and health in creative ways. The collaboration of health and technology is also helping our bioscience leaders reach their goal of creating a globally competitive bioscience sector and making Arizona a national authority in select areas of the biosciences by 2025. Our leaders are also working hard to develop the formation of an entrepreneurial hub in Arizona to ensure a successful future for the bioscience industry. The creation of incubators like the BioInspire, Center for Entrepreneurial Innovation, and others have helped to produce health-focused startups. In fact, Arizona has a strong portfolio of MedTech companies that have recently received funding including Neolight and EpiFinder.  

Internet of Things (IoT) 

The Greater Phoenix Economic Council (GPEC) recently launched “The Connected Place” campaign celebrating the rise of IoT in Phoenix. We have become a center of manufacturing and software development, and our state’s long history of semiconductor development makes us the perfect candidate to become a hub for IoT innovation. Companies with a major presence in Arizona like Honeywell, Intel, Uber, Avnet, and Boeing are leading the way. The startup and education community has followed suit with a number of promising innovations from companies like Ingenu and RunSmart. 

Virtual reality 

Innovations in virtual reality are commonplace in Arizona’s technology community. In education, the Immersive Teaching STEAM Academy creates fun and exciting projects using cutting-edge technologies like virtual reality to keep students engaged. In gaming, Waden Kane Studios is developing immersive and interactive virtual reality worlds with this technology. A number of non-technology sectors are also exploring ways to implement virtual reality to enhance its customer experience. New applications of virtual reality are being discovered frequently. A startup out of Tucson, Saccadous, developed a virtual reality goggle-type helmet that tracks eye movements to diagnose concussions. The field is young, but as the technology reaches more young minds, especially the up and coming engineers in our state’s leading universities, I anticipate virtual reality taking off in Arizona. 

AND ONE MORE 

One sector that I have not mentioned is data science or “big data.” This technology is weaved into each of the sectors above and nearly every company in Arizona’s technology community utilizes data science in one way or another. Nonetheless, big data is among our most important field of technologies because of its need in today’s connected world. There will always be opportunities for investment in any company specializing in the data sciences. 

As mentioned above, I won’t make specific recommendations on companies to invest in, but I am certain that opportunities exist to engage with revolutionary startups. These 10 sectors are among the fastest-growing in Arizona and, in my opinion, will produce the most promising innovations deserving of your investment dollars. 


Steven G. Zylstra is president and CEO of the Arizona Technology Council

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