Earlier this month, Portland-based Clean Edge Inc. released its annual “U.S. Cleantech Leadership Index” which lists the highest ranking states and metro areas based on their activities around clean energy, renewable technology adoption, investment and innovation. The report gives unique insight into the intersection between a city's public and private support with the growth of the industry within its borders. Here is where Phoenix lands on the report as well as other key findings.
Where Phoenix ranks
The reports puts Phoenix #31 among the top-50 cities across the United States in an aggregate of innovation-related categories. Specifically, it looks at “indicators such as venture capital investments in clean tech, clean-energy patent activity, and the presence of U.S. Department of Energy labs, clean-energy incubators” and more. Not surprisingly, four of the top seven cities are based in the Bay Area, and Phoenix has some work to do in order to ascend the rankings.
What it means
Although Phoenix is strong in several areas, including electric vehicle adoption, this report underscores the fact that we lag in several key areas. The first is venture capital. Earlier this year, it was revealed that venture capital deals had reached nearly $60B in 2015, but Arizona’s share had decreased to less than ½ of one percent. The Leadership Index reinforces these findings for the cleantech industry as Arizona ranks #39 overall in capital - although it notes that venture deals were down across the board in 2015. There is promise, however. Organizations like the Arizona Technology Council and its partners have dedicated themselves to loosening the purse strings of the investment community through legislative means, notably through the recapitalization of the Angel Investment Tax Credit.
The second main area of improvement is the emergence of new innovations - and businesses - in clean energy and related fields. For example, AZ Big Media reported that Arizona is slipping within the solar vertical in spite of the great opportunity it poses. Moreover, only three of the top-25 Arizona Innovation Challenge grant semi-finalists were classified as “cleantech / renewable energy” when announced by the Arizona Commerce Authority in April. This reiterates the need to focus on cultivating competitive businesses backed by validated technologies. There is a strong regional presence from the Cleantech Open accelerator, which strives to advance and fund startups in the space; in addition, CEI has a few startup success stories at our incubator program - most recently one of our earliest clients, Arbsource, was sold (along with its wastewater treatment technology) in a potentially seven-figure deal. But these companies also face big challenges, which makes the presence of cleantech-focused support all the more important to growing the sector within Phoenix.
Have anything to add? Send us your comments below! And if you want to see where the other cities rank, download the full Clean Edge report here.