Arizona Governor seeks tech funding – Backs incentives for in-state investments

Gov. Janet Napolitano today will begin a push to get more capital invested in Arizona’s up-and-coming technology companies.

Napolitano, speaking at the second Governor’s Technology Forum, will announce her support for a set of bills designed to create tax credits and other ways of encouraging investment in the state’s technology companies, Napolitano spokeswoman Jeanine L’Ecuyer said Monday.

Jane Larson
The Arizona Republic

http://www.azcentral.com/arizonarepublic/business/articles/0210TechForum10.html

The legislation was a key recommendation from business leaders on the Governor’s Council on Innovation and Technology, a group Napolitano appointed last year to develop ways to diversify and expand Arizona’s knowledge-based economy.

The council focused on three areas considered key to the growth of high-tech businesses: capital formation, technology commercialization and business infrastructure.

Of the three, capital formation is considered the most important because small technology companies have historically had a rough time raising money in Arizona.

The group issued its recommendations in December, and L’Ecuyer said the governor will fully endorse them.

The recommendations included passage of a constitutional amendment that would allow universities to own stock in small companies licensing university inventions. The group also made suggestions for helping existing technology companies stay and expand in the state.

Napolitano will name Sharon Harper, former president of the Greater Phoenix Economic Council, to be the chairwoman of a campaign to pass the technology commercialization amendment, L’Ecuyer said.

The governor also will charge the Council on Innovation and Technology to spend its second year implementing the recommendations.

More than 425 people are expected for today’s forum at the Hyatt Regency Phoenix, sponsored by the Arizona Technology Council, the Southern Arizona Tech Council, the Arizona Commerce Department and high-tech trade association AeA. Banker Ed Zito, chairman of the governor’s council, said Arizona has been a "capital-starved" state.

Only five venture capital firms are active in Arizona, he said, and new industries such as biotechnology will need more capital to take root.

"We want to grow knowledge-based jobs by growing knowledge-based companies," Zito said.

He noted that the average annual pay for high-tech workers in Arizona is more than $54,000, compared with the average in the overall private sector of about $30,000.

The bills introduced last week are designed to make investing in growing tech companies more attractive. They include:

• A small business opportunity program. It would offer tax credits to individuals who invest in new firms, especially those in biotechnology fields or in rural areas. Up to $20 million in tax credits would be available.

• An extension and enhancement of the state’s research-and-development tax credit. The tax credit is due to expire this year.

• An Arizona investment fund. The "fund of funds" would offer contingent tax credits to attract investment in the state by venture capital firms. Up to $50 million in tax credits would be available, with no more than $10 million available per year. A board would be established to oversee the fund.

This proposal will likely be the most controversial in a Legislature concerned with keeping a tight rein on the state’s finances.

A similar bill failed two years ago when supporters became divided between competing proposals for establishing support for more venture capital in the state.