OPINION: 'Investment in quality pre-revenue companies can help foster data for future rounds of investments, proof of concept on a larger scale, and place Arizona as a leader in the start-up world,' writes entrepreneur Andrew Weinberg.
Launching a startup is hard. Arizona has a great startup community, but there are things we should do to make it better.
People are also reading… Although support exists for investors, not so much for founders. A founder of a company cannot qualify for the Arizona Investment Credit if you own more than 30% of your startup. It is designed to help angel groups who invest, not the bootstrapping co-founders. Funding entities often want proof of concept, customers, and revenue. However, to do so, startups often need additional funding beyond what family and friends can provide.
The Arizona Development Corporation whom we approached, for instance, will not lead a round, nor will they consider investment by accredited investors as a sufficient measure for them to invest. You must have an investment from an angel group that has an established due diligence process in place, for instance, as well as revenue. This restriction excludes many good startups.
At the moment, there is a funding gap for quality pre-revenue companies. Creating some type of funding to supplement bootstrapping in pre-revenue startup companies is needed in Arizona. The qualifying criteria for the Arizona Investment Credit could be modified to allow entrepreneurs with startups to make their own dollars go further. Universities could be better incentivized to partner with small community startups.
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