Why Phoenix Deserves a Spot on the List of Best Cities for Startups

Phoenix skyline and saguaro cactusDue to the growing community of tech entrepreneurs, Phoenix has earned the nickname “Silicon Desert.” In the latest Kaufman Metropolitan Area Rankings for Startup Activity, Phoenix moved from 12th last year to 14th this year after topping the chart in 2012. There are many reasons that Phoenix attracts startups. Here we take a look at four key areas.

Cost of Living. Can you afford to live here? The cost of living in Phoenix is 3% less than the Arizona average and 5.1% less than the national average (per AreaVibes.com). There are plenty of amenities to support every neighborhood. And, for commuters, the price of gasoline in Phoenix tends to be lower than the national average. Plus, there is a robust public transit system to help entrepreneurs get around town.

Assets. Is the area well-capitalized and are there resources to meet your needs? Phoenix is home to Arizona State University—one of the nations largest schools—and talent ripe for the picking. Labor costs can be a major part of expenses, and Phoenix salaries are competitive versus many other areas. And, funding is growing. According to the National Venture Capital Association, about $40 million was invested in local startups during Q1 2014, up from just $6 million in 2013. Plus, angel investors such as Tucson-based Desert Angels are actively seeding local endeavors. With over 114,000 millionaires in Arizona, there is definitely ample access to capital.

Startup Ecosystem. Is the atmosphere supportive to startups? Indications are a go. According to Ranker.com, “things are hopping in AZ, with new technology startups popping up at a rapid rate.” The Arizona Small Business Association and other such organizations provide resources and networking opportunities. Co-working spaces help foster entrepreneurship in Phoenix by providing a place to build ideas, network, and find mentors. From incubator companies such as Arizona Center for Innovation to events like Start-up Week and Venture Madness, Phoenix is a friend to entrepreneurs.

Government and Taxes. Are there favorable tax laws for investors and bourgeoning businesses? Local and state government support entrepreneurship with programs like the Arizona Innovation Challenge, which annually awards $3 million to startups. Plus there are a wealth of programs and activities to assist large and small businesses. Tax policy allows company owners to write off investments in startups. Taking into account individual income taxes, major business taxes, sales taxes, unemployment insurance taxes, and taxes on wealth or assets such as property, Phoenix is a supportive arena for startups. Throughout the area, key stakeholders are eager to help one another.

Not only is the weather favorable, but Phoenix has a good business climate. Phoenix deserves a spot on the list of best cities of startups… and if it isn’t listed, then it is one of the best kept secrets for startups. Bring the heat.