The Arizona tech ecosystem has a wide range of angel and institutional investors that actively seek out deal flow. I asked some of the top angel investors in Arizona what advice they can give to founders looking to raise cash in the cactus state.
Join an Incubator
Some investors suggest for founders to consider joining an incubator, such as Seed Spot, MAC6, Startup Tucson Thryve, Game CoLab, Bunker Labs, BioInspire or one through the larger universities, as it helps investors target businesses that have potential. According Canyon Angels chairman and founding member Tim Kelley:
Enter Pitch Competitions
For startups ready to pound the pavement, the next step is to enter local pitch competitions and get in front of top investors. Top public pitch competitions include Arizona Innovation Challenge (AIC), Venture Madness, IdeaFunding (Tucson) and BioAccel, among others.
Research Investment Fund Specialties
As with any ecosystem, investment funds have their specialties and it’s important for founders to do their research and match the stage of one’s company and type of product with a fund’s criteria. Jim Goulka, managing director of Arizona Technology Investors (ATI) said: Depending on a startup’s product or service, it might be worth exploring industry-specify funds. Aaron Call, partner of MediCoventures, said by getting deep into “the network within the industry one can find high net worth individuals that aren’t visible – and finding money might not be acquired through the traditional investment group.” For example, med and health tech startups could consider the BioAccelerator Venture Capital Fund and hospital systems fund such as Mayo Clinic Ventures and Dignity Ventures, or choose to target angel groups such as VA Angels, Desert Angels or ATI who have life science expertise.
Treat Every Investor Interaction with Respect
When engaging with investors, regardless of their investment preference, it’s important to treat each interaction with respect.
Improve Your Credit Rating
If a founder decides to seek a loan or working capital from a bank, make sure to clean up your credit and have a solid business plan. Noreen Bishop, Senior VP regional manager for Chase Business Banking said: To improve your credit rating, Bishop suggests to “separate business from personal expenses and set up a credit card in the name of the business-it’s one good way to demonstrate equity in the business and establish good credit.”
Right Deals, Right Partners
Ultimately, investors are looking for the right deal, and the right partners. Patrick Armstrong, partner of Canal Partners, said, investors are looking for a business relationship, not a sales pitch: For women and minorities seeking capital, there are grants and funds specifically designed for this population. One such fund is the TOP Foundation – a sponsored project by the Fusion Foundation. Francisco X. Aguirre, CEO and founder of TOP and The Office Pile co-working space said, the joint mission is to “advance education and entrepreneurship for minorities and women, by providing office space, microloans, grants, mentorship and scholarships.”
Have a Story to Tell
Regardless of where you look for the money, at the end of the day, you need to solve a problem and have a good story to tell. “Raising money in Arizona is like raising money in any geographical location. You have to understand your value proposition to the investors,” TK Keugler, general partner at Wasabi Ventures, said. It’s important to be able to articulate how your business is “poised for rapid growth to become a $100MM plus business in the next three to five years. If you can’t tell that story in a plausible way, you will struggle to attract the correct type of capital as an early-stage startup.” Other Arizona-grown angel groups looking for a good story include Desert Angels, Canal Partners, Canyon Angels, Tallwave Capital, Thunderbird Angel Group, Grayhawk Capital, and Startup AZ Foundation. Find more AZ investors, pitch competitions, networking events and more startup resources at Arizona Commerce Authority. Make sure to follow the hashtags on social media to keep up on all the great things that will go down at Phoenix Startup Week: #PHXStartupWeek and #ChaseBasecamp. This article is part of a Startup Week content series brought to you by Chase for Business. Startup Week is celebration of entrepreneurs in cities around the globe. Chase for Business is everything a business needs in one place, from expert advice to valuable products and services. Editor’s Note: An earlier version of this article inaccurately referred to Tallwave as an incubator.
