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Venture-capital funding pours in
2011 becoming very good year for Arizona, report says
by Betty Beard - Oct. 21, 2011 08:39 AM
The Arizona RepublicThis year is shaping up to be the best for venture-capital funding in Arizona in four years, according to one of two major reports tracking this.
Arizona companies have attracted $226 million in the first three quarters, compared with only $75 million awarded in all of 2010, said Andy Coumides, a Phoenix-based partner with PricewaterhouseCoopers LLP, which prepares a quarterly MoneyTree report in conjunction with the Venture Capital Association, based on data provided by Thomson Reuters.
The third quarter drew only four deals worth $6.7 million, but he said that is not unusual because the first two quarters were so productive.
What is significant, he said, is that in the first three quarters, seed money invested in startups and young companies has already exceeded the amounts given in each of 2007, 2008, 2009 and 2010.
"It's already a given that it's going to be a very good year and a very strong year for Arizona, even if nothing comes in the fourth quarter," Coumides said.
A separate Dow Jones VentureSource report also shows Arizona companies attracting more investments this year than last year, so far. The companies have different methods of compiling their data.
The Dow Jones report indicates that Arizona firms received $155 million in the first nine months, compared with only $66 million in the first three quarters of 2010.
In the third quarter, five companies landed $89 million, according to Dow Jones.
Kevin McHolland, a partner with Ernst & Young LLP in Phoenix who works with venture-funded companies, said Arizona companies continue to struggle to get venture capital because several years ago the funders began awarding their money closer to home. And Arizona doesn't have a robust capital-investment environment, he said.
Or companies may find it easier to get money for their early stages, such as when products or services are still in the concept stage but struggle to secure funds for later phases.
Not all venture-capital recipients are willing to be identified.
The largest third-quarter recipient, according to the VentureSource report, is AFS Technologies, with $86 million. The Phoenix company provides business automation software for the food and beverage industry.
Three other companies that received funds in the third quarter, according to the MoneyTree report, are:
Southwest Windpower Inc., $2.3 million. This Flagstaff-based company designs, manufactures and distributes small wind systems.
Dicom Grid Inc., $1.4 million. The Phoenix-based company offers Internet-based digital medical imaging that allows medical facilities and physicians to archive, search, exchange, share and act on the data.
Flypaper Studio Inc., $200,000. Also based in Phoenix, this software developer created Flypaper, a product that lets programmers and others create, edit, share, track and reuse Flash and video content.
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