When Katie Sieker relocated from San Francisco to Arizona over 12 years ago while working at local startups, the state was ripe for growth. That growth has arrived.
“In the last decade, the startup ecosystem in Phoenix has exploded,” says Sieker, who now serves as senior vice president of venture partnerships at the Arizona Commerce Authority (ACA), the state’s leading economic development organization.
Indeed, the Grand Canyon State has cemented its reputation as a global incubator for innovation and entrepreneurship that’s seen an influx of tech talent and has attracted ever-increasing investment from venture capital funders and large, established tech companies.
And now, through a public-private initiative, the ACA is investing in the state’s AI future by partnering with tech giant LG Electronics to spur innovation in the technology reshaping the global economy. The partnership’s centerpiece AI venture studio, StudioAZ, will promote and scale local AI-first enterprises in energy, healthcare, sports and entertainment, says Sieker. The studio is backed by a venture fund anchored by LG Electronics through its Silicon Valley-based investment vehicle NovaWave Capital.
“Arizona is proud to welcome NovaWave Capital’s venture studio to our state, a powerful addition to our thriving innovation ecosystem,” said Arizona Governor Katie Hobbs. “This prominent initiative reflects Arizona’s growing global importance in advanced technologies and our commitment to fostering next-gen innovations across artificial intelligence, energy, advanced manufacturing and more.”
NovaWave Capital, created to support businesses under LG Electronics’ North America Innovation Center LG NOVA, is focused on helping to scale high growth AI companies in the energy, health and business sectors with the goal of delivering measurable, economic and industrial impact, according to NovaWave Capital’s Founding Managing Partner, “Tonton” Ali Diallo, who also founded Aurion Capital.
"By bridging Silicon Valley innovation with the fast-growing ecosystems of regional and international markets, we are seeking to build the next generation of AI, energy and health companies that will accelerate America’s innovation economy," said Diallo. "We are excited to partner with the State of Arizona to build a new venture studio that will support this vision and further position Arizona as a hub for next-generation innovation."
Here’s why a global player like LG Electronics is investing in Arizona, and how the state is supporting AI and tech innovators.
Arizona Is A Magnet For Tech And AI Investment
Beyond Arizona’s consistent ranking as the No. 1 state for foreign investment, Sieker says the launch of StudioAZ reflects the state’s emergence as a destination for growth capital. Innovative companies at home and abroad appreciate the state’s pro-business environment, educated workforce and strategic location bordering California and Mexico, she notes.
Arizona is already home to major employers in fast-growing industries, including semiconductors, EVs, advanced manufacturing, software and biotech. For example, LG Energy Solution is investing billions of dollars to build an electric-vehicle battery plant outside Phoenix.
“We have a really, really compelling recipe in our state,” says Sieker. “It's easy to do business in Arizona, and we pride ourselves on that.”
The healthy lifestyle the state offers, with a focus on sustainability, sports and outdoor activities, also makes it a favorable place to invest in and live, she adds, also noting that StudioAZ’s intention to support startups and early-stage companies across energy, healthcare, sports and entertainment made it an easy choice to say “Yes”.
“These verticals are naturally aligned to what our state is good at,” she says.
For example, Phoenix has become fertile ground for health tech entrepreneurs. The new, 30-acre Phoenix Bioscience Core innovation district being developed in the city’s downtown will boast the highest concentration of research scientists in the state from universities, healthcare providers and biotech startups.
LG Energy Solution’s concurrent EV project reflects growing opportunities for sustainable energy companies in Arizona, which already boasts the world’s largest autonomous all-electric ride-hail territory.
“We have a really, really compelling recipe in our state. It's easy to do business in Arizona, and we pride ourselves on that.”
A Hotspot For Events That Cultivate Partnerships And Spark Innovation
A major sports hub home to several teams and franchises, Arizona also hosts high-profile sports and entertainment year-round, making it an ideal home base for innovative enterprises, says Sieker.
“All of these sporting events create opportunities for tech — for testing of tech [and] for testing of different types of audiences that show up to these stadiums,” she says.
The ACA has been steadfastly promoting the state to funders and founders alike, including hosting the first-ever Arizona Tech Week in April. The decentralized conference featured more than 400 events statewide, making the largest inaugural Tech Week ever.
To help streamline the experience for event organizers, the ACA leveraged Partiful, a third-party software that offers a standardized RSVP management system for event hosts, free of charge.
“Arizona Tech Week is the first major non-coastal tech week to use Partiful as its core events platform, and the results speak for themselves,” said Luis Ocampo, head of community at Partiful. “Four hundred-plus events across an entire state in year one is unprecedented for an inaugural tech week, and we're proud to have helped make that possible.”
Sieker says these efforts support her team’s major goals: catalyzing $10 billion in startup funding for local entrepreneurs, bringing 100 startups to the state and supporting 10 “unicorns” — or billion-dollar companies — by the middle of next year. Even before the latest venture fund announcement, the ACA was well on its way to achieving its targets set in 2024, having facilitated six unicorns and around $6 billion in seed capital, she says.
“Partnering on this venture studio allows us to achieve those goals for our state,” says Sieker.
A Startup Ecosystem Built For Arizona’s Future
Sieker says Arizona’s transformation into a thriving tech hub has been inspiring to be a part of. Venture capital investment in the state has more than quadrupled since 2010, and a commercial real estate industry watcher recently named Phoenix the best big city for startups, with Tucson and Mesa placing among the top five smaller markets.
“We've had unprecedented growth from companies relocating here, and all the while having a sustainable ecosystem, low regulations, favorable business environment, low taxes,” she says. “Arizona has been the best kept secret, but now is our moment.”
Entrepreneurs looking to start a business in Arizona also benefit from a longer runway due to the lower cost of living and running a business, Sieker notes, with startups often getting an extra nine months to turn a profit than they would in more expensive cities like San Francisco or New York.
“Being affiliated with this venture studio gives you … global capital, global support and access to companies and resources that [are] unprecedented.”
The launch of the venture fund is critical in supporting the state’s startup ecosystem because it will help “supercharge” innovation, says Sieker, incubating cutting-edge technologies and fast-growing businesses that will fuel more jobs and investment.
She equally expects StudioAZ’s impact to be significant within the next five years, driving tech advancement and business creation in its targeted sectors.
“StudioAZ … opens up opportunities globally,” says Sieker. “Global companies, global venture capital, global mentorship, and global marketing for their projects.”
CREDITS
Writer: Tom Barkley
Editor: Mallory Gafas