It’s in the headlines on a daily basis — yet another startup secures major investment from one venture capital firm or another. On the surface, this appears to only be great news for the investors and the ones on the receiving end of those funds, but the impact actually reaches far beyond that.
Funding a startup sets off a ripple effect. It’s not just an investment into that company’s future, but it’s also an investment in the community in which they are headquartered. Particularly if that startup has an initiative to build locally, it becomes an investment in the real estate they occupy, the local workforce they hire and even the surrounding businesses those employees frequent. For this reason, investors are increasingly immersing themselves in their local entrepreneurial ecosystems, which is beginning to create a circular relationship that benefits both business and community through a continuous cycle of reinvestment.
Carrying a Community
This model is referred to as “community carry.” It’s the idea that a region’s business ecosystem and its community, through continuous commitment to each other, work together to grow together. This flywheel model is thriving in the Valley thanks to the circular relationship between local investors, an ever-growing pool of innovative local startup founders who are choosing to build in Phoenix, and a strong community with partners like Arizona State University working to support it all. It’s a process that takes time, but the economic impact is beginning to compound.
For instance, in an impact study done by the Greater Phoenix Economic Council for Coplex in December 2018, capital and resource investments made by Coplex generated $1.97 million in tax revenue for Greater Phoenix in the period 2012–2018. During that same time, it stimulated an estimated $16.9 million of direct personal income and created $71.9 million in economic output in the region. And this is just Coplex. There are other organizations in the Valley contributing tremendously to this flywheel.
But far beyond the economic outputs of these investments overall is the impact individual startup founders are having on Arizona’s economy.
Insuring a Strong Future
Three years ago, Sonny Patel was a 21-year-old student in Arizona State University’s Entrepreneurship + Innovation program also working as a sales director and financial advisor at a top life insurance company. Coming to this role with the eyes of an entrepreneur, he quickly recognized the process of buying and selling insurance was unappealing and cumbersome — it no longer fit the way consumers wanted to engage with businesses.
Sensing an opportunity, Patel developed a solution that would simplify, and take the guesswork out of, the insurance buying process. That solution eventually became Insurmi, a conversational-AI platform being used by a number of global insurance carriers to modernize the way they engage with their customers.
Like many entrepreneurs, Patel bootstrapped the company to get it off the ground and gain some early traction. But he had big visions of growing a headquarters in Phoenix and expanding the customer base globally. Simultaneously, Insurmi was beginning to turn heads in the insurance industry and interest was building. Thus, Patel faced what so many other tech startup founders eventually encounter –– continue bootstrapping to reach eventual growth or seek investment to accelerate growth, meet demand and hire additional support.
Patel chose the latter. Now, having recently secured a $1-million investment from prominent international angel investors and the Global Insurance Accelerator, in a round led by Coplex, Patel is reinvesting capital in the local economy, securing office space in downtown Phoenix and creating close to 10 new high-tech jobs by year-end. At the same time, he’s joined other homegrown companies like WebPT, Carvana, Qwick, Keap, Solera Health, CampusLogic and countless others in putting another innovative company on the Phoenix map.
This is the sort of progress that’s been a long time coming in Phoenix, and it’s thanks to the participation of the city’s investor community that is focused on supporting local innovators, the founders who are choosing to stay and build here, and the greater community.
“Though I’ve lived in numerous other communities throughout my life, I see the potential here in Phoenix and there was no question I wanted to grow Insurmi here,” Patel says. “This community has been incredibly supportive and I want to do my part in reinvesting in it, which I hope to do through more job creation as Insurmi grows.”
Zach Ferres is the CEO of Coplex, a nationally ranked venture builder that partners with industry experts, entrepreneurs and corporate innovators to start high-growth tech companies.