Data from Pitchbook shows 74 venture capital deals made from 2009 to 2011 in the Phoenix area, with a total of $332 million invested. But from 2012 to 2014, those numbers jumped dramatically with 145 deals made and a total of $834 million invested – it’s heating up in the desert and not just the temperature. Historically, the nations fifth largest city’s economy has been dominated by a mix aerospace and electronics manufacturing (particularly defense related), tourism, and, to a lesser degree medical industries. While the military drives and supports aerospace and electronics in the Valley, the dramatic scenery and eight months of near perfect weather make the destination desirable for travel and retirement – the latter contributing to the need for top notch medical care.


More recently, things like a low cost of living, a high standard of living, a well-educated workforce, and the presence of numerous colleges and universities have combined to make Phoenix fertile ground for startups. With the abundance of institutions of higher education, it has never been a question of a lack of available talent but rather of making sure that the talent stays put after graduation – that is changing. The formation of a startup ecosystem, in many ways, resembles how an island forms – slowly, over a period of time it acquires the resources needed to sustain and support life and then, at some point, it hits a pivotal moment and bang! – life begins to flourish and growth becomes explosive – similar to a “hockey stick” graph. Key components such as accelerators, incubators, co-working, and capital are all coalescing in Phoenix at the moment. Those with the desire and initiative now have a local support structure sufficient to succeed and success begets success.

A Bright Future

Well known early startup success stories in the Phoenix area include tech ventures such as GoDaddy and InfusionSoft and have grown to hundreds of employees giving a small glimpse of what the area is capable of. These successes have set precedence and helped to attract interest and investment in the area in the form of Angel Investment Groups and Venture Capital Funds. At the same time, centers of innovation and mentoring have sprung up in the form of incubators, accelerators, and coworking spaces. Such things rarely follow a linear tract rather, they seem to feed off themselves in a somewhat exponential manner gathering speed as they go. Today, the Phoenix startup community is active and expanding. Examples of current early-stage startups in the area include Gobiquity with their innovative product “Go Check Kids” leveraging phones with high end cameras to screen for eye disease, USeed a crowd funding solution focused on helping to offset the costs of higher education, and Farley’s market – a startup that seeks to partner with warehouse stores such as Costco to supply bulk savings to areas that do not have sufficient population to support such stores – economies of scale arbitrage

Key Components

Coworking – spaces for collaborative collisions:
In 2008 the valley had only a few loosely organized “hacker-ish” spaces like heat sync labs and Gangplank. Since then these spaces have acquired better space and more structure and have been joined by more formalized (though still very organic) institutions such as “cohoots”. Within the last year and a half alone we have seen the appearance of a number of high end “commercial grade” coworking spaces such as “That’s Mod”, The Desk Hub, and The Office Pile. Businesses that are in the business of co-working. Desk Hub, “OTP”, and Cohoots are all near capacity and looking to expand.

Educating and Encouraging startup
Incubators and accelerators have followed a storyline similar to the coworking spaces. A dozen years or so ago the valley had only a handful – Greater Phoenix SCORE, the Maricopa Small Business Development Center, and Stealthmode partners. In the last five years we’ve seen an explosion of these types of ventures – Seed Spot, Big Bounce, Tallwave, and a number of programs sponsored by ASU. Incubators and accelerators fill in those gaps not provided for in a formal education and are essential for helping entrepreneurs navigate the waters of startup.

Fueling Growth
Historically finding funding locally has been a chief complaint among Phoenix entrepreneurs. Whether the complaint has been valid or not it can’t be argued that there’s been a marked increase in Angel and VC activity in recent years. Sources of capital local to Arizona include Tallwave, Desert Angels, and most recently Wasabi Ventures. Without some form of funding a startup cannot move from ideation to implementation much less grow.

A word on the map – definitions for incubators, accelerators, and coworking are loosely defined and subject to interpretation. Additionally there can be overlap – Seed Spot for example rents desks in a coworking fashion and Tallwave provides funding in addition to being an accelerator. The included map is based on my own interpretations and is just a sampling. It is not meant to be an all inclusive list. If you feel an omission is material please reach out to me at

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