January 25, 2012
Host: Ted Simons
Capitalizing Start-up Businesses
- Where entrepreneurs find the funding they need to turn their great idea into a booming business.
- Gordon McConnell - ASU Executive Director for Venture Acceleration
| Keywords: start-ups
Ted Simons: In our continuing coverage of economic growth, we take a look at how fledgling companies find the capital they need to get started. I'll talk to an expert in venture capital. First a look at a local company that used money from owners and government grants to get going.
Scott Grimshaw: let me take you on a journey through Colnatec.
Narrator: To make our high-tech world unbelievably precise measurements are needed. a company in Gilbert produces a device from a disk of quartz crystal that can measure more precisely than any other in the world.
Scott Grimshaw: We're involved in producing sensors that operate on an atomic level, which means quite literally, we measure atoms. Those atoms are used to make things that we all find very exciting these days.
Narrator: The sensors are coated with gold to make them into a device that can detect vibrations. Besides needing gold to make their product work, Colnatec like any other startup needed plenty of gold to get going, relying on money from its partners, and government grants.
Scott Grimshaw: The challenge a small business has in just getting off the ground are myriad. From simple things I don't have enough money in my pocket today to I have enough money in my pocket for today but not tomorrow versus I'm going up against a giant with $1 billion.
Ted Simons: And here to talk about how companies like Colnatec and others find capital is Gordon McConnell, executive director for venture acceleration at Arizona State University. Thanks for joining us.
Gordon McConnell: Thanks for having me.
Ted Simons: Where do start-ups get their money?
Gordon McConnell: It's a question were hear an awful lot. We see a lot of entrepreneurs on a daily basis. It's not an easy answer. In the first case it's what kind of company. A large portion of companies in the U.S., small, medium size companies, and they tend to raise money from what we call the three Fs: friends, families, and fools. Fools obviously because of the high failure rate. And they bootstrap themselves, they use revenue from a product or service and build the company up over time. In fairness most western countries that's the backbone of a lot of economies. If you're talking about growth companies, which is what we tend to see at ASU skysong, then that's slightly different. Colnatec is a good example of a company that has raised money from two sources, one is local, which is the Arizona commerce authority, their innovation challenge last year had a million and a half and they funded eight companies, which we’ve just seen one. The second source that this company has used is small business innovation research grant, which is government money. Again, it's for companies that have a high-tech knowledge product probably.
Ted Simons: What about venture capital? What does venture capital look for? I understand sources are getting a little more selective out there these days. With that in mind what are they looking for? What methods are best used to get their attention?
Gordon McConnell: Interestingly enough, I supppose most people tend to think of entrepreneurs as being solo players, Richard Bransons, Steve jobs of this world. Ironically it's teams of venture capital people fund. I used to work in an early stage fund many years ago. The first thing we would look at before the idea, is the team. If the idea doesn't work out, if you fund a good team chances are they will figure something out. If you fund a really good idea and somebody produces something tomorrow that wipes it out a weak team will fail to respond. So Team is critical. The first thing we talk about when individuals come in and start talking about a start-up we say, you're probably and there are people who can do it otherwise you'll need to form a team who can strengthen whatever you already have.
Ted Simons: Interesting. Is it tougher in Arizona raising this kind of capital than maybe in other parts of the country?
Gordon McConnell: I think the country probably breaks into two. There's Silicon valley, the original of the species; Boston, New York and other places like Boulder and Chicago. Arizona would probably be in the set of states that are on the way up. I think if you went back five or seven years when the property boom was going on that's where the money was because it was easy to make a lot of profit. Understandably that has changed and won't be coming back any time soon. We're seeing not only a resurgence in entrepreneurship but an increase in interest from investors that maybe would have looked elsewhere. So I think we’re on the way up in the state at the moment.
Ted Simons: Interesting you mentioned the housing crunch, and the housing crisis and the whole nine yards because from what I understand, lots of small businesses used to take home equity and those sorts of things as start-up money. Can't do that much so any more.
Gordon McConnell: In fact over the years, Ted, I have met people who have maxed credit cards, taken out car loans that never ended up in a car. Entrepreneurs are people that will do whatever it takes to get to where they need to be and they will pretty much do anything that's legal in terms of raising money. So I'm sure the home equity would have been a source for some people.
Ted Simons: I saw a report that it costs less to start a small business right now than it really has in the past 15 some odd years. Does that make sense to you?
Gordon McConnell: Absolutely. One of the reasons there's such a surge of entrepreneurs is partly because of the recession but partly because it's cheaper. Technology and technology services have dropped the price, so if you were starting a company in 2000, it was going to cost you hundreds of thousands. Now you can do it for tens of thousands if you're in a technology company, so it's radically changed the ability for groups and people to raise cash.
Ted Simons: And yet, on the other side because of the housing crisis, because of the economic slump, all these different aspects, I have also read folks are more wary of starting up businesses just the overall mood. They aren't as willing to take a risk. Make sense again?
Gordon McConnell: It does, but the numbers don't prove that and the Global Entrepreneurship Monitor report, which is the global analysis of entrepreneurship, came out last week and there was a surge of 60%. In the U.S. in 2011 in entrepreneurship. That was after several years where it was a declining number, so suddenly people, whether because of options or because I think we're in the age of entrepreneurship we're entering a period where entrepreneurship is suddenly becoming much more of a cultural phenomenon rather than a small group people in silicon valley. That seems to be a figure that is replicated in many countries in the report.
Ted Simons: I guess like other economic factors, pent-up demand is playing here as well. Got a lot of folks waiting on the sidelines, they're tired of waiting on the sidelines.
Gordon McConnell: Absolutely, and from 14-year-olds to 80-year-olds. The other interesting statistic is that a lot of people over 50 are starting companies, which again seems counterintuitive in the age of the Mark Zuckerberg Facebook-type company, but the fact is this is a game you can play at any age there are companies being formed by 15-year-olds who are selling them for millions of dollars that they developed in their bedrooms. In terms of a time to be involved in this, for us at ASU Skysong, it's very exciting.
Ted Simons: Very good. Good to have you here. Thanks for joining us.
Gordon McConnell: Thanks very much.
- An Arizona Capitol Times reporter provides a mid-week update on news from the Arizona State Legislature.
- Luige Del Puerto - Arizona Capitol Times
| Keywords: Giffords
Ted Simons: Good evening. Welcome to "Arizona Horizon." I'm Ted Simons. It's official. Congresswoman Gabrielle Giffords formally resigned today on the floor of the U.S. House of Representatives. She handed her letter of resignation to the house speaker John Boehner and was greeted with a long-standing ovation and tearful speeches from her colleagues. Governor Jan Brewer must now call a special primary and general election to fill Giffords' seat in Congress. Those elections are expected to take place in April and June. Gabrielle Giffords's resignation is sending ripples all the way to the Arizona state capitol as some lawmakers contemplate a run for her seat. Here with more in our weekly legislative update is Luige Del Puerto of the Arizona Capitol Times. Good to see you again. Was this a surprise at the capitol? The timing more than anything?
Luigie del Puerto: it was a huge surprise. It happened on a Sunday when we saw that posting on her Facebook site and basically said she's going to announce she's resigning after she's completed one thing, which is to finish -- watch the president give his state of the union address. So it was completely out of the blue.
Ted Simons: Yeah, and now we have the president in town this afternoon. This evening. I'm guessing not too many Democrats hanging around the state capitol right now.
Luigie del Puerto: I know for sure many of them are there. I was speaking with one of them. He was there. I imagine many of them are in fact there right now.
Ted Simons: At the president's speech.
Luigie del Puerto: Yes.
Ted Simons: I'm imagining other lawmakers may be thinking of going down to Tucson to run for this particular seat. How does Gabrielle Giffords's resignation impact the legislature with some city lawmakers thinking I could run for this?
Luigie del Puerto: It impacts the legislature in very dramatic terms. You have a couple of lawmakers considering running to fill her seat, which means to say they have to organize, raise the money, run for the primary and then in June. Which means they have one question they have to decide, which is are they going to resign from the state legislature and run for the seat. It's kind of hard to stay in the state legislature and run full-time when you have such a short time frame to raise the money and organize your campaign.
Ted Simons: In many respects you're running two campaigns. You're filling out this particular cycle and then you're running again for a whole different district, CD2, which encompasses CD8.
Luigie del Puerto: Correct. These lawmakers who are considering running now I would imagine are essentially the same guys who said they are going to run for what is essentially CD8 and CD2. So they will have to run in the primary, if they win they have to decide whether to run for election in the new district.
Ted Simons: Democrats Steve Farley, Paula Bowd, Matt Hines. Anyone else?
Luigie del Puerto: Those are the three lawmakers right now that being -- those are three guys considering at least are indications they may run for the seat. On the Republican side we have the senate majority whip also considering running to fill that seat. So he has a bigger problem since he has a leadership position which means he has to decide whether he wants to resign. If he stays in the legislature he has to decide whether he wants to continue being whip. The whip is a huge job, they have the budget to craft. You're whipping at the same time you're running for Congress and your district is two hours away.
Ted Simons: Keep an eye on that. Also give us more information regarding the idea of no public testimony during debate for the budget. What's going on here?
Luigie del Puerto: The appropriations committee from the Senate typically holds budget presences. Basically, they hear from agencies about their spending, programs that are very important to them. These hearings give lawmakers a sense of where they should -- in crafting the budget gives them a sense where to cut, where to put money in, et cetera. It's not unprecedented for these hearings to not take in public testimony. People are not able to -- people, lobbyists, interest groups, your regular individuals who are there at the capitol being able to have their say. Now, Don, the chairman of the Senate appropriations committee, yesterday decided the committee will not have public testimony yesterday. It's not unprecedented. He also told me in fact after the hearing that he is also considering not having any public testimony at all throughout the budget process, which means even when the budget bills are considered, we may not actually have public testimony.
Ted Simons: And that would be unprecedented, wouldn't it?
Luigie del Puerto: For budget bills I would think that would be unprecedented. I have only covered the state legislature for five years and in those five years I have always seen public testimony during at least the budget bills.
Ted Simons: let's keep it moving here. There's efforts to repeal SB 1070. Obviously that's not going to go anywhere. We have to understand that, but it does open a dialogue. The dialogue got pretty loud there at the capitol a couple days ago.
Luigie del Puerto: On Monday there was dueling protests. Pro 1070, anti 1070, and they held their seperate press conferences on the Senate lawn. It was rowdy, There was heckling, chanting, one side people giving their pieces and you would hear the other side heckling. So it was kind of fun for a while. The point is this bill like you said will not go anywhere. It's introduced by Stephen Fallardo. Ron Gould, who is the chairman has already indicated if it landed on his committee it will not come out. I don't imagine, even if it did, which is very iffy, even if it got out of the legislature, very doubtful, I can't imagine the governor reversing her decision two years ago to sign this bill, repeal it this time.
Ted Simons: That would be a major story if it's even heard down there.
Luigie del Puerto: It would be. The assumption is that even Gallardo acknowledges his point is to start conversation and starting conversation I don't imagine really this bill getting heard in committees.
Ted Simons: One more thing regarding immigration, the Arizona accord making noise similar to the Utah compact. Again, that doesn't sound like it's likely to fly too far.
Luigie del Puerto: Many Republicans are giving it the cold shoulder. The idea is to offer the set of principles that would guide how we debate the immigration issue. Essentially the ultimate aim is to have more humane, more comprehensive solution that is very complex and often emotional problem. Republicans like I said some said we don't really need it. The principles are so vague. The groups are advocating for this are saying it's very concrete. When we say we shouldn't enact policies that would separate families it can't be more concrete than that. Of course some Republicans actually do like this Arizona accord. Jerry Lewis, The new Senator from Mesa is very supportive, early supporter of this idea.
Ted Simons: we'll keep an eye on that one. Appreciate your help. Thanks for joining us.
Luigie del Puerto: Thank you.
Phoenix Chinese American History
- A look at the history of the Chinese American community in Phoenix as the City hosts Phoenix Chinese Week 2012, a celebration of the Chinese New Year.
- Lucy Yuen - First Generation Chinese American
- Eddie Yue - First Generation Chinese American
| Keywords: Chinese week
Ted Simons: Welcome to the year of the dragon. The Chinese new year started Monday as did Phoenix Chinese week 2012. It's a week long celebration of Chinese culture and history. Here to talk about Phoenix’s Chinese community is Lucy Yuen, first generation Chinese American born in Phoenix in 1931, and Eddie Yue, also a Phoenix native. Thanks for joining us.
Lucy Yuen: Thanks for having us.
Eddie Yue: Thank you.
Ted Simons: you betcha! Let's start with you, Lucy. The history of Chinese Americans in Phoenix. Give us a grand overview.
Lucy Yuen: Well, it goes way back. I think we have had Chinese in the Phoenix area for more than 100 years. One of the first ones was Thomas Tang's mother, Lucy sing. She was born in Tempe in about 1905, I believe. She was probably the first Chinese woman born in the Phoenix area. After that many of the Chinese migrated into Phoenix. Most of the people that lived in Phoenix ran grocery stores. That was our main way of earning a living. I think it was that way because that was an occupation that didn't require a lot of skill, you know, and nothing that was too technical. So many of the Chinese had grocery stores. So a lot of us grew up in the grocery store business. You'll find that the first generation Chinese that are here were in the grocery business.
Ted Simons: I know that's how you grew up.
Lucy Yuen: That's right.
Ted Simons: You grew up that way as well. About 59th avenue and Thomas, a little gas station, a little action out there?
Eddie Yue: Yes. My dad came here in 1922 after graduating from University in China. At that time it was Canton. It was the Harvard of the south. When he graduated he had to take two foreign languages. English was one and the other was German. So he spoke Mandarin, Cantonese and a dialect. He put it to good use because when he came to Phoenix he taught at one of the Chinese schools.
Ted Simons: You mentioned Chinese schools. From what I read, correct me if I'm wrong, the kids, young kids would go to public schools, provided they were allowed in the public schools, and then on weekend and later they would go to Chinese schools.
Lucy Yuen: That's correct. Every day from 5:00 until 8:00.
Ted Simons: Every day after regular school from 5:00 to 8:00?
Lucy Yuen: that's right. Then on Saturday we went from 9:00 until 4:00. So that was --
Eddie Yue: I think one of his students was judge Thomas Tang, whose father was here, and had some mercantile in the old part of Chinatown next to America west arena. A while back they tried to -- the Phoenix Suns wanted to build a W Hotel over it but it was an historical building owned by the city of Phoenix. There was a committee that was against it. I was the co-chair along with ex corporation commissioner Barry Wong. We filed suit on that and won that. As a result the Sun mercantile building is still there. Judge Tang containing was one of our prominent citizens. He was on the city council, he was a superior court judge, and later appointed to the U.S. circuit --
Lucy Yuen: 9th Circuit Court of Appeals.
Ted Simons: sure.
Eddie Yue: in San Francisco. His wife, Dr. Pearl young, is noted too. She just recently received the spirit of America award with the national Chinese American citizens alliance. This year in August of 2011.
Lucy Yuen: She was very prominent in the field of pediatrics for the Maricopa County health department.
Ted Simons: You mentioned America west arena. My general knowledge of this says that that was at one point Phoenix's Chinatown. Literally the imprint of the arena is over over what was Chinatown.
Lucy Yuen: That's right. That was at 1st street and Madison. The Chinese school Eddie and I went to was at 2nd and Madison. The America West arena was built right in that site there.
Ted Simons: Were there other areas of town in the valley, other cities, other areas where the Chinese population seemed to take root?
Lucy Yuen: No, I think in Phoenix that is what is different from other cities. The Chinese population is scattered over a wide area. We have not concentrated in one area. When there was a Chinatown a lot of the men lived there. A lot of the men had families in China. They always worked hard and they saved their money and they sent it back to China to support their families. When we were growing up, we assumed, our parents told us that we were going to be going back to China, so we never thought we would be living here at that time. Of course being children, you know, they tell you what's going to happen and that's what you're going to stay with. But then in 1937, the war started with Japan, so I think that more or less --
Ted Simons: Changed those plans. Yes.
Lucy Yuen: Changed those plans.
Eddie Yue: Other notable Chinese people in the Phoenix area was Senator ONG. In 1946 he was elected to the Arizona house, and then he was -- when he was here, he -- I guess he had something to do with close Campbell, one of our first governors. And then in 1965, he ran for Arizona Senate and was elected to the Arizona Senate. So he was probably one of the first Chinese who held such a high office among Chinese Americans. One of our pioneers. To this day, you know, there's another person in the Arizona house, and that's Kimberly Yee. She is a member of the Yee clan, which I'm a member of.
Ted Simons: I know areas of south and central Phoenix were very important to the chinese community here in Phoenix because those were areas that were for lack of a better word segregated, were they not?
Lucy Yuen: yes, that's right.
Eddie Yue: yep.
Lucy Yuen: Most of the grocery stores were free south of Roosevelt, and you'd find a grocery store on almost every corner on Jefferson street, Washington street, Madison, down to Buckeye. That's where most of the Chinese grocery stores were concentrated.
Eddie Yue: Then in the '50s they started branching out.
Ted Simons: We’ve only have about a minute left. I don't want to cut you off, but we have Chinese week going on. What do you want folks to know?
Lucy Yuen: We have -- we're going to have food booths and we'll have a children's pavilion where they will be demonstrating crafts and children can participate in that. We have a full exhibit of which many of the pictures we're showing you today. We'll have continuous entertainment on the stage and then of course our finale will be at the banquet at the great wall, which will serve a ten-course meal.
Eddie Yue: This Friday we're having the opening at noontime at the cultural center. The American legion post 50, which I'm a member, will be doing the honor guard and posting the colors at that time.
Ted Simons: Very good. it's great to have you both here. Thank you so much. We appreciate it.
Lucy Yuen: We enjoyed being here.