For generations, northern California’s Silicon Valley has been known as the tech startup center of the United States. In fact, 78 percent of investments towards startups go to companies located in California, as well as New York and Massachusetts. The newest location for startups however, isn’t on either of the two coasts. The next major tech industry hub is in the Southwest U.S.A. — specifically — Phoenix, Arizona. In fact, according to Shannon Selby, the economic development program manager in Phoenix, the number of tech companies in Arizona has grown by over 300 percent.It should be noted that this growth is certainly not accidental. The conditions in this desert town, most famous for its resorts and retirees, are ideal for allowing startups to flourish. There are a number of factors that have historically made Phoenix an ideal site for company innovation. In the past, companies such as Intel and Motorola have seen tremendous levels of growth in their Arizona-based businesses due to pro-business policies. Now, the continuous effort to bolster this business-positive climate is attracting companies from Silicon Valley and New York City. Major companies such as Uber and Orb Health have recently opened offices in Phoenix. The lower cost of doing business and of living is a major appeal, but this isn’t the only factor driving both existing businesses and new-ones to the Phoenix area.
Phoenix is creating such a high potential for growth in that it has spent years cultivating a supportive atmosphere in which innovation can reach its pinnacle. One example is the #yesPHX movement, which seeks to provide support for new companies. It essentially acts as both support group and breeding ground for new ideas. Additionally, the StartupAZ Foundation exists in order to help new, innovative startups succeed in the area through connection and inspiration.
Another contributing factor that adds to potential business growth is that Phoenix has a vibrant array of universities and colleges which provide the city with a well-educated and well-trained workforce. There are three major universities in the area and a number of smaller community colleges that all do a great deal to support startups. For example, Arizona State University has recently launched a program called the ASU-Draper-GSV Accelerator. This program is dedicated to helping fund, pilot, and ultimately credential products that were created by startups and that seek to bolster the higher-education community.
In fact, Phoenix is in the unique position of being able to retrain the country’s workforce through developments in the edtech startup sphere. Companies such as Apollo Education Group and CampusLogic have placed their headquarters in Phoenix, and there are already more than 50 such startups in the region. This means that not only will Phoenix have an abundance of highly educated workers, but it will also have a number of skilled workers who did not pursue a traditional educational route who can work in the ever expanding technological sector. This type of relationship between higher education and startups will inevitably create a stronger future workforce while supporting growth within the current startup climate.
In addition to the large, highly qualified labor force, Phoenix’s central downtown location makes it a great spot to do business. The warehouse district contains the “Galvanize Learning Community for Technology”, a campus that currently holds 60 startups within the span of two square miles. The goal of this space is to allow people access to the skills necessary to work and compete in an industry increasingly reliant on technology. The campus allows individuals and companies to grow and expand in the area by allowing people access to education, mentorship, and ideas.
Of course, with growth comes more growth. As Ryan Bartos, the executive vice president at Jones Lang Lasalle said, “Tech companies tend to locate where other companies locate, and it kind of builds momentum. That’s really where downtown Phoenix is right now”.
The relationship between higher education and startups will inevitably create a stronger future workforce while supporting growth within Phoenix’s current startup climate.
The location is not just an ideal atmosphere for businesses though. Phoenix is a city with a number of appealing amenities for employees. Craft beer and cool coffee shops are widespread and can easily compete with those in the larger cities, and there is no scarcity of dining options. This means that Phoenix is not only attractive for businesses, but also for the individuals who make up those businesses. People want to go to Phoenix not only because of its business-growing potential, but also because it’s a great place to live.
While Phoenix may not be what people immediately visualize when they think of an ideal startup location, it’s evident that this ever-growing and consistently innovative region is beginning to swell with new startups in the tech industry. While Silicon Valley may be the symbol for startups, the future of the industry likely lies outside of what we currently envision. Due to the supportive and attractive conditions that Phoenix provides, more and more entrepreneurs are choosing to make Phoenix, AZ their home.
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