Ambassador Event: Greater Phoenix Tech Story
Published: 03/13/2023
Updated: 06/13/2023
Insight on Greater Phoenix technology, startup and venture capital ecosystems
Greater Phoenix has evolved with the needs of industry since its emergence as a tech leader, supplying military technology after World War II. The region has grown into a home for a variety of next-generation ecosystems in the modern internet age.
“We think we’ve entered a new age in tech where every modern industry in the U.S. is pervaded by modern technologies,” said CBRE senior field research analyst Drew Callow. “In essence, every industry is becoming a tech industry, and the classic tech hubs of the 20th century on the coast, the gateway markets, cannot meet the growing demands of this alone.”
GPEC and CBRE analyzed the growth of the local tech sector and presented their findings in the Greater Phoenix Tech Story 3.0 report with a panel discussion featuring leaders in venture capital, startups and site selection. The presenters and panelists were:
- Drew Callow, Senior Field Research Analyst, CBRE
- Kevin Major, Senior Client Strategy Consulting Manager, CBRE
- Fiona Onyango, Research Analyst, Greater Phoenix Economic Council
- Gregg Scoresby, Founder & Managing Partner, Phoenix Ventures
- Kristen Stephenson, Senior Vice President of Research & Analytics, Greater Phoenix Economic Council
- Diana Vowels, CEO, StartupAZ
“Our region has been able to establish a very strong tech base — that is exhilarating, to say the least,” Onyango said. “We are continuing to see large operations in the semiconductor industry and fintech operations; we can see the autonomous vehicles really thriving, and software development, just to mention a few.”
Greater Phoenix’s tech growth
Greater Phoenix is among the most rapidly expanding tech markets. Jobs in the industry increased more than 15,000 people from 2016-21, an 18.3% growth rate. Higher-quality jobs, defined by years of experience and educational programs, are prevalent within the ecosystem.
This has helped diversify the region’s economy and make it more resilient against the threats of economic decline. Recent additions to the local ecosystem include TSMC Arizona, Sendoso, Xnrgy, Stryker, ElectraMeccanica, Robinhood, Align Technology and Fundera by Nerdwallet.
Many of these companies have made large capital investments involving manufacturing plants. Major said that while some office-based tech companies have a greater ability to relocate, investments like these represent a long-term commitment to the market.
“Some of these other tech jobs — chip manufacturing, renewable battery manufacturing — those jobs are typically tethered to a lot of capital going into the market and actual sites. Those are much harder to move, so that’s an investment long term,” said Major. “That’s one of the things we’ve been impressed with the Phoenix market.”
The region expanded its tech base with support from of the education pipeline. Between major in-state institutions that feed into the technology workforce — Arizona State University, University of Arizona, Grand Canyon University, Northern Arizona University, Maricopa County Community Colleges and the University of Advancing Technology — enrollment in fall 2021 exceeded 416,000 students. Those schools had more than 16,000 graduates in tech-related fields in 2020-21.
“I think the greatest opportunity we have is our community college system, our technical schools and our bootcamps,” Vowels said. “They are the ones who can make a difference, and they can make people work-ready in months instead of years.”
Venture Capital in Greater Phoenix
Greater Phoenix’s startup funding scene continues to grow. From 2012-22, there were 373 venture capital deals in the region, accounting for about $3.8 billion funding. Momentum has picked up recently, with $1 billion in funding in 2021. In 2022, the market decreased from the 2021 peak, mirroring the national trend.
“Venture capital migrates to capital-efficient, high-growth businesses,” Scoresby said. “Venture capital broadly definitely skews toward software more than other industries. If we want more venture capital in Arizona, you need more software. It’s the No. 1 area of venture capital investment.”
Greater Phoenix has about 27,000 software developers and 99,600 total tech jobs, but these numbers are still below some peer markets.
Read more about Greater Phoenix’s startup & IT ecosystem
Greater Phoenix Startup Ecosystem
An increase in VC funding aligns with a shift of perception toward Greater Phoenix as a startup market. Vowels said over the last six to seven years, the region has been a discernable hub for entrepreneurs.
Local innovation hubs like SkySong and the Phoenix Bioscience Core have helped change the way people view the market, but there’s still work to be done in attracting the enterprisers and funding that is so often centered around traditional tech markets.
Entrepreneurs who succeed in the region can continue to participate in community organizations and programming like Venture Madness, Phoenix Startup Week and the Arizona Technology Council — or, like Scoresby, launch their own funds and groups — in an effort to drive the market forward.
“People need to see it happen … It’s not real until you’re surrounded by it,” Vowels said. “We need more examples of it, and we need to amplify the ones that are making it here, and that are taking risks and building things.”
For more information, read the report created in partnership by GPEC and CBRE.
