The Business Journal has a good article today documenting some of the issues facing start-up companies in Arizona due to the weak economic environment...
Part of the issue is the nature of startup investing. Venture capital firms, often one of the first stops for late-stage startups, have hunkered down and are investing only in their own portfolios — if at all. According to the MoneyTree report compiled by PriceWaterhouseCoopers, the first quarter was anemic for deals in the Southwest, with only $40 million of the $3 billion invested nationwide going to Arizona, Utah and New Mexico companies.
Of that, about $12.2 million went to three Arizona businesses. Southwest Windpower in Flagstaff nabbed the bulk, about $10 million. FiREapps Inc. in the Valley received $1.2 million, and Salutaris Medical Devices Inc. got $2 million.
Those numbers, of course, are not pretty for Arizona.
For earlier-stage Arizona companies there is still some hope for finding local money through angel investor networks. I attended the TiE event last week and had the opportunity to listen to an excellent panel of angel investors. Their general consensus is that angels are still looking for investment opportunities in Arizona start-up companies - only that the size of the investments will be smaller, the valuations will be lower and the scrutiny of the company's viability will be greater.
Not an easy time to be an entrepreneur, but I often remind people that during the last dry spell in funding, some great companies were founded and thrived. I think a more difficult funding environment weeds out some of the companies that should not normally receive funding, and makes people who do have great ideas work even harder to polish those plans and to figure out the correct business model for bringing those ideas to the market - thus improving their chances for success.
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