The amount of venture capital available to early-stage technology businesses in Arizona leaped 81 percent last year, according to the Cyberstates 2006 report released early today by AeA, formerly the American Electronics Association.
The report, which is compiled annually by the AeA, confirms that Arizona’s economy was strong during the past 12 months, said Cory Miller, executive director of the AeA Arizona Council.
“Arizona remains an attractive location for technology companies to innovate,” she said.
She attributed the jump in venture funding to increased efforts by the state’s three universities to commercialize their research discoveries.
Those efforts have increased the visibility of the intellectual property that is available in Arizona to venture capitalists, she said.
“We don’t have a lot of places to go other than up,” she said.
The Arizona increase was especially notable because venture capital investment was down nationwide by 5 percent in 2005 because of a decline in investments in software, according to the Cyberstates report.
The increase in venture capital bodes well for future employment gains in Arizona’s high-tech sector, said Matthew Kazmierczak, vice president of research and industry analysis for AeA. That’s because start-up companies often use their capital to hire new employees, he said.
The report said the state’s high-tech industries added a net 1,300 jobs in 2004, the latest year that state data is available. It was the seventh biggest gain in the nation during that year and compared with a loss of 6,600 jobs in 2003.
The biggest increases were in computer programming, which added 1,800 jobs; engineering services, up 1,000 jobs; and research and development labs, up 600 jobs. Those gains were partially offset by losses in other categories, including a drop of 1,600 jobs in the semiconductor industry.
Despite the loss in semiconductors, it remained the state’s biggest high-tech employment category with 22,500 jobs, the fourth highest in the nation.
Kazmierczak said employment nationwide in the semiconductor industry turned around last year with a net gain of 1,000 jobs nationally. Figures for individual states are not yet available. Nevertheless, Kazmierczak said it’s likely that Arizona semiconductor employment fared better in 2005 than in previous years.
Arizona’s large semiconductor sector helped the state to rank sixth in the nation in high-tech exports last year, the report said. Arizona exported $7 billion in high-tech goods in 2005, accounting for nearly half of all exports from the state. Many of the exports were microchips that were exported to Asia to go into electronic devices.
Nationally, high-tech industries edged forward last year, the report said. High-tech employers added 61,100 net jobs nationally in 2005, the first increase in tech jobs in four years. High-tech manufacturing added 3,300 net jobs nationally, the first tech manufacturing increase since 2000, the report said.
High-tech exports also rose by 4 percent nationally for a total of $199 billion last year, the report said. The biggest buyers of U.S. high-tech products were the European Union, Canada and Mexico. On the other side of the ledger, the U.S. imported the most tech products from China, Mexico and the European Union.
The U.S. had a technology surplus of $10 billion with the EU, but a deficit of $76 billion with China and $19 billion with Japan.