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85–091 2013

FIELD HEARING IN ARIZONA: SMALL BUSINESS 

ACCESS TO CAPITAL IN SCOTTSDALE, ARIZONA 

HEARING 

BEFORE THE

SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT 

AND REGULATIONS 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

SEPTEMBER 23, 2013 

Small Business Committee Document Number 113–037 

Available via the GPO Website: www.fdsys.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

BLAINE LUETKEMER, Missouri 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

JAIME HERRERA BEUTLER, Washington 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

DAVID SCHWEIKERT, Arizona 

KERRY BENTIVOLIO, Michigan 

CHRIS COLLINS, New York 

TOM RICE, South Carolina 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

YVETTE CLARKE, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRAD SCHNEIDER, Illinois 

RON BARBER, Arizona 

ANN McLANE KUSTER, New Hampshire 

PATRICK MURPHY, Florida 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. David Schweikert ........................................................................................... 1 

WITNESSES 

Mr. Jim Goulka, Managing Director, Arizona Technology Investors Forum, 

Mesa, AZ ............................................................................................................... 3 

Mr. Nima Jacob Nojoumi, Co-founder & CEO, itsWorth, LLC, Tempe, AZ ....... 4 

Mr. Thomas H. Curzon, Senior Partner, Osborn Maledon, Phoneix, AZ ............ 6 

APPENDIX 

Prepared Statements: 

Mr. Jim Goulka, Managing Director, Arizona Technology Investors 

Forum, Mesa, AZ ........................................................................................... 23 

Mr. Nima Jacob Nojoumi, Co-founder & CEO, itsWorth, LLC, Tempe, 

AZ ................................................................................................................... 28 

Mr. Thomas H. Curzon, Senior Partner, Osborn Maledon, Phoenix, AZ ..... 30 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

None. 

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(1) 

SMALL BUSINESS ACCESS TO CAPITAL IN 

SCOTTSDALE, ARIZONA 

MONDAY, SEPTEMBER 23, 2013 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT AND

REGULATIONS, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 1:00 p.m., in Enterprise Room, Skysong Innovation Center, Arizona State University, 

1475 North Scottsdale Road, Scottsdale, Arizona, Hon. David 

Schweikert [chairman of the Subcommittee] presiding. 

Present: Representative Schweikert. 

Also Present: Representative Gosar. 

Chairman SCHWEIKERT. Before we actually start getting on some 

of the traditional opening script, I want to share with you. The 

Committee and Subcommittee staff have actually been very kind to 

those of us who are members as we are also trying to build a 

record, as we often refer to it, from hearings all over the country 

of what is actually going on, what is happening in different regions, 

what is working, what isn’t working, because we often find different parts of the country have very different views. 

So with that, thank you for all being here. I would like to first 

start today’s hearing by thanking our witnesses for being here. 

I would also like to thank the staff of Skysong. Is the actual title 

really ‘‘Skysong Innovation Center’’? Okay. And is Kubion around? 

He didn’t come? You know he is my cousin. Yes, I just thought I 

would share that. 

Thank you to Arizona State University for assisting my office 

and arranging the room and this hearing. 

In Washington, part of my role as a Subcommittee Chair on the 

House Small Business Committee is to hold Congressional hearings 

on topics that are important to small business. There is a two-part 

mission to these hearings. First, the testimony that we receive 

helps educate members of Congress on relevant issues that help us 

better represent the needs of small businesses throughout the 

country. 

So far this year, as Chairman I have held hearings on the Securities and Exchange Commission and their accountability for missing 

deadlines and the great frustration we have on the JOBS Act in 

regards to what the Securities and Exchange Commission has just 

blown through all their deadlines, which is one of the few bipartisan pieces of legislation we have had through Congress in the last 

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2 

couple of years, and we can’t get the regulatory bodies to finish 

their work sets. 

We have also held hearings on the Regulatory Flexibility Act and 

its goal of reducing overall burdens of Federal regulations on small 

business. 

Congressional hearings can also serve as educational tools for the 

community, also for small business and those who are trying to understand that relationship. 

As chairmen, we receive testimony on innovative ways small 

businesses are raising capital by hearing from crowd-funding 

websites. We had a great hearing earlier this year with Indiegogo, 

Fundrise, Rock the Post, as well as, believe it or not, Samuel 

Adams brewery, whose leadership have set up—it is not technically 

a micro-funding platform, but they are putting money into small, 

growing businesses around the country. A very innovative thing for 

a company to do is to take part of its capital and engage in such 

lending. 

Today we want to bring that same opportunity to Scottsdale to 

examine the current environment for small business trying to raise 

capital. Our goal is to talk about the resources available here that 

small business can access to grow their business and create jobs. 

To that end, we will hear from our witnesses who are either investing in, creating, or advising local small businesses, to see what 

is available in this marketplace. 

Again, I thank you all for being here. 

And with that, let me also just explain—do we have the lighting 

system? The running joke is everyone gets 5 minutes. When you 

are down to 4, the yellow light goes on. Yellow means talk faster. 

And at red, we are supposed to be done with the time. I am not 

going to be particularly persnickety because we are all not running 

off to floor votes, but trying to keep it fairly crisp gives the opportunity to have some dialogue back and forth because, I promise 

you, somewhere you are going to say something that sets off questions from both Congressman Gosar and myself, and staff, and 

maybe each other. 

With that, I was actually going to let Congressman Gosar do an 

opening statement, and then I was going to come and give one last 

bit. 

Mr. GOSAR. I am going to keep mine short. 

Chairman SCHWEIKERT. What happen when—Congressmen not 

getting their microphones on—Our first witness today is Jim 

Goulka. Did I get it right? 

Mr. GOULKA. Good enough. Thank you. 

Chairman SCHWEIKERT. What would be perfect? 

Mr. GOULKA. Goulka. 

Chairman SCHWEIKERT. Isn’t that what I said? 

Mr. GOULKA. I thought you said Goulka. 

Chairman SCHWEIKERT. All right. Managing Director of the Arizona Technology Investors Forum, a group of angel investors. Jim 

is also CEO of Jumpstart Solutions, an early-stage business intelligence software company, and has been involved in several other 

technology companies throughout his career. Jim, I know, had 

some interesting things to share with us. 

Jim, you have 5 minutes. 

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STATEMENTS OF JIM GOULKA, MANAGING DIRECTOR, ARIZONA TECHNOLOGY INVESTORS FORUM, MESA, ARIZONA; 

NIMA JACOB NOJOUMI, CO-FOUNDER AND CEO, ITSWORTH, 

LLC, TEMPE, ARIZONA; THOMAS H. CURZON, SENIOR PARTNER, OSBORN MALEDON, PHOENIX, ARIZONA 

STATEMENT OF JIM GOULKA 

Mr. GOULKA. Thank you, Chairman Schweikert. Thank you. 

Thank you, Congressman Gosar, for inviting me. I will try to be as 

brief and as concise as I can. 

Starting a business, which is really the part of small businesses 

that I am particularly interested in, is a life-changing event for entrepreneurs. So you think about how they start their businesses. A 

few people have some ideas. There is nothing there. It is an idea. 

And then they have to turn that idea into a real, actual business. 

So they need some money for that. So they put some of their own 

money into the business. Then they go to their friends and family, 

and sooner or later they are going to run out of that kind of money. 

So where do they go after that? There are, obviously, grant programs around from the Federal Government and from the state. 

But even those are difficult to come by, and so they start to think 

about other people with cash, cash to invest. 

The first thought, of course, is to go to a bank. But if you are 

a young person in particular, if you have an idea and no assets and 

you are using your savings to go into the business, you are essentially unbankable, and most of the banks know that, and most people understand that. 

So young entrepreneurs or old entrepreneurs have to find other 

sources of capital, people who are able to understand that a new 

business is a risky business. The new risky business might be 

changing the world. It might be changing behavior. It may work or 

it may not. So who do they go to to find this kind of money? 

Well, there are angels and there are venture capitalists, the 

usual two crowds of people. Venture capitalists generally understand the important characteristic for real small businesses is that 

they are not interested in doing transactions of less than $2 million. So if you are a small business and you are looking for a halfa-million dollars or a million dollars, there aren’t very many VCs 

that will do that kind of funding, and there are certainly no VCs 

in Arizona doing that kind of funding. 

So that naturally drives entrepreneurs to angels. And who are 

angels? We are, according to the SEC, accredited investors. We 

meet their test to do that. We are individuals who are willing to 

risk our own money on an uncertain venture in the hopes of 

achieving a superior economic return. 

What does that mean? It means that we are prepared to take a 

loss of 100 percent of our money. It means we understand that. It 

means that we have the ability to absorb that kind of a risk, that 

kind of a loss, and we think that we can deal with that by being 

very careful about what we do, collaborating with other people of 

like mind, maybe not the same attitude but like mind to evaluate 

opportunities and select those that we think are really good investments. 

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4 

That is pretty sophisticated stuff. We learn to do this by doing 

it. We do transactions. We learn from each other. Arizona Technology Investor Forum is a group of people that does this together, 

and part of the benefit of it is that we learn from each other. And 

as a result, we can do better transactions. 

But here we are in Arizona. There are 170 or so angels in the 

organized angel groups of ATF and Desert Angels. We know that 

there are many more people here who could invest in these kinds 

of transactions. Part of our responsibility is to become acquainted 

with those people and show them how to do it, show them the 

kinds of risks, show them how we mitigate risk, show them how 

they can make a judgment on their own to participate in a transaction, and then give them the opportunity to do that. 

So we are interested in finding and building the angel population 

in Arizona. Angels here are investing in early-stage or start-up 

businesses that are not investing specifically in real estate but in 

these other things where you can lose all of your money. So now 

we look at how can we do that better. 

Part of what we do at our angel group is to have education programs. We have our Sidecar Fund is what we call it. It is a fund 

to enable people to learn how to do what we do, and most importantly, we have the 71 individuals who are mentors to each other, 

showing each other what is going on. Unfortunately, the new 

changes that the SEC is proposing in 506(c) start to curtail the 

ability for current angels to continue to do our angel investing and 

make it much more difficult for new angels to enter the fray because they have to disclose information that they have never, ever 

had to disclose before, which means they are not going to do a deal. 

And more than anything else, this is an impediment to doing more 

transactions here. 

Thank you. 

Chairman SCHWEIKERT. Thank you, Jim. Actually, I would love 

to talk to you some more about the accredited investor rules that 

may be coming out of the SEC. 

Our second witness is Jacob Nojoumi. 

Mr. NOJOUMI. Nojoumi. 

Chairman SCHWEIKERT. Close enough. Co-Founder of 

itsWorth.com, a website that is looking to be the resource for finding the value of everything in the world, which is actually a concept I have a fascination on because one of the things our office has 

worked on for years is shouldn’t everything of value have a platform it could be traded on. 

Prior to starting itsWorth.com, Jacob worked in various roles for 

the local company named GoDaddy. 

Jacob, 5 minutes. Share with us. 

STATEMENT OF NIMA JACOB NOJOUMI 

Mr. NOJOUMI. Congressman Gosar and Chairman Schweikert, I 

appreciate the opportunity to speak today. My name is Nima Jacob 

Nojoumi and I come from a long lineage of entrepreneurs. I am the 

Co-Founder and CEO of itsWorth.com. I recall when Shad Nojoumi 

initially approached me with the concept for our big data startup. 

He said, ‘‘Nima, I want to valuate the world.’’ That statement put 

a huge smile on my face. After doing thorough research, I came to 

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5 

the realization that with today’s technologies, there is no reason 

why we couldn’t create the world’s first valuation engine. The concept is both simple and powerful, an engine that provides users 

with up-to-date, real-world financial values. 

itsWorth.com is the Google of values. We are on a mission to provide an unbiased valuation of the world people can contribute to 

and feel empowered by to make informed buying and selling decisions. 

My three best friends and I, who at one point were colleagues at 

GoDaddy, decided to pool our life savings together and take a 

chance, to live the American Dream. Today, we have 8.4 million 

products in our database and are six weeks from releasing our Software-as-a-Service platform. We are extremely grateful for local experts like Tyler Rives of Silicon Valley Bank in Tempe and Evan 

Gilbert of Polsinelli Law Firm for helping position us for success. 

However, I have traveled to California 10 times this year alone 

to gain access to advisers and talent, to build relationships with 

angel investment groups and with the venture capital community. 

It has been a long and hard journey. I am here to say entrepreneurs in Arizona should not have to leave the state to gain access to human or financial capital. The time is right. Arizona has 

an emerging startup community. It needs to develop, it needs to 

mature and grow up fast. That is the problem and the opportunity. 

Fortunately for us, there are celebrated experts that have outlined the structures, systems and processes, and the social architecture to develop an ecosystem. I cite Dr. Barry Stein’s 1974 MIT dissertation: ‘‘Human resources are the wealth of nations; each nation 

has the responsibility as well as the need to develop and conserve 

them. But human resources are not the simple equivalent of physical persons, as mere existence does not automatically create 

human beings. Rather, they develop through participation in social 

life.’’ 

Mr. Mark Tomizawa, a strategist and entrepreneur, invested the 

past five years of his life developing social architecture to deploy 

in real time, and I quote him: ‘‘As for the ecosystem, we need freedom, support and know-how, as individuals at work, in school and 

in life, to do the right thing. That means more humans supporting 

each other, live and in real time. That means passing knowledge, 

mindfully, from generation to generation. That is part of how a 

healthy society is defined.’’ 

I am here to say that as a state, we are leaving money and opportunity on the table. We can and we must do better. We must 

coordinate better and connect the dots more strategically. The 

stand-alone organizations must join forces to create an ecosystem 

of opportunity, an ecosystem of human capital, and an ecosystem 

of local job creation. We can and we must become known as a great 

state where great ideas come to life. 

To cross the chasm from communities to ecosystem, we need to 

leverage existing resources, thought leaders like Dr. Stein and Mr. 

Tomizawa, and bridges that work on an integrative level. Tyler 

Rives, Evan Gilbert and I are examples of bridges. We naturally 

connect people to resources and initiatives. 

I believe conversations like these are essential and will serve as 

a catalyst for change and growth. I am not here to ask the Small 

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6 

Business Committee for solutions. I am asking that you leverage 

and organize existing capital, whether it is human or financial, to 

provide entrepreneurs with the opportunities they need to meet today’s evolving market conditions and to remain loyal residents of 

the great State of Arizona. 

Chairman SCHWEIKERT. Thank you, Jacob. 

I would like now to introduce our next witness, Tom Curzon, 

Senior Partner for the law firm of Osborn Maledon, where he represents emerging growth-oriented companies. Thomas has also 

been involved in Invest Southwest, a local fundraising event which 

helps small business access more than $250 million since 1992. 

Thomas, 5 minutes. Share with us. 

STATEMENT OF THOMAS H. CURZON 

Mr. CURZON. Thank you, Mr. Chairman and Mr. Gosar. As the 

note said, I have been practicing law here for over 33 years, more 

than 30 of that representing startups or investors in startups. I 

have been involved in all kinds of organizations in our ecosystem, 

one of which is Invest Southwest that you referred to, which is basically the venture capital conference that has been in Arizona 

since 1992. 

It has evolved with the markets and through three recessions, 

and it basically serves as an annual—you can think about it as a 

forum where we invite investors, both venture and angel investors, 

all accredited historically, to attend the several-day event, and then 

we invite companies seeking growth capital, not small doughnut 

shops and pizza parlors but companies that aspire to be the next 

big company. 

They apply. We will typically get 50 to 100 applicant companies. 

They go through a rigorous selection process, and then we pick 10 

to 12 of those companies who will do a pitch, a 10-minute pitch to 

the audience, and then by that we hopefully will expose them to 

potential investors so that they can then begin a journey that we 

hope will lead to them being funded by somebody at the conference 

or perhaps in the chain of networking events that we all know happens. They will end up getting funded because they surfaced. 

The event has been the premiere capital conference in Arizona 

for a very long time. We are continuing to offer it, and in light of 

the changing capital circumstances, we are restructuring it again, 

and we will hopefully be serving it up next March. 

It is an important part of our ecosystem here, and one of the 

things I want to accomplish is answering questions that you may 

have about it so that you better understand how events like it 

work. 

One of the things that we are struggling with right now in the 

leadership—and I am on the board of directors of it and am helping 

in that planning—is what do we do in light of the new rules that 

become effective today, and in light of the proposed rules, the comment period that ended today under Regulation D. 

Our dilemma is that we would like to have it be as all-inclusive 

as possible. It has typically been accredited-only invitees. We can 

keep it that way, but because of the new general solicitation and 

advertising rules, there is now a question whether a demo day type 

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of event or an event like what we are doing will be now deemed 

to be general solicitation, when before we didn’t think it was. 

It has never been bright-line clear, but the way the ecosystem 

has worked here and in Silicon Valley and Boston and everywhere 

else is that that kind of event, you are not committing a sin if you 

hold the event and you have companies pitch and so forth, and if 

they happen to do deals, it worked out. 

Now we don’t know, and we can’t get advice out of the SEC. We 

know it is not in Congress’ hands. It is in the SEC’s hands. But 

it is a dilemma. If you see Tech Crunch, if you see any of the publications right now, it is a question that everybody is asking in our 

ecosystem, how can we keep doing these events that are immensely 

important. 

The thing I want to pass along for the Committee’s understanding to help understand, in the world of the principally hightech capital raising, capital formation, the angel venture world, 

what has happened over the last several decades is the evolution 

of an ecosystem where people have figured out how to do the deals 

relatively efficiently without driving up a lot of legal cost. The paperwork the deals are done on is pretty standardized now, not because of any rules but because of the efficient marketplace, and because it has been in the context of this accredited-only regulatory 

regime. 

That is part of the secret sauce, is being able to keep the cost 

down, keep as much of the legal work out as you can, and have the 

market function smoothly, and it has worked pretty well. 

The observation I would make about the recent crowd-funding 

changes on the public side, as well as in the accredited-only side, 

is it is injecting a whole new level of cost, and by that I mean principally legal fees. I think that jeopardizes the public side of it, the 

public crowd funding, because of the needs of those small businesses now to spend money on lawyers to do the paperwork the 

SEC wants, or seems to want, and it is going to be a challenge because of that to it actually working, and that is the point I think 

I want to emphasize, the practical side of what they are doing. 

With that, I would be happy to, at the right time, take questions. 

Chairman SCHWEIKERT. Thank you. 

I may actually go because you actually started with a couple of 

lines that I would love to dig into. 

First off, with the reinterpretation, the lifting of the ban to general solicitation, how is that helping, how is that hurting? And you 

see that now also in conflict with some of the mechanics and the 

definition of qualified investor? 

Mr. CURZON. Well, the way we work the conference is we want 

to have as big an attendance as we can for the event to expose potential investors to these companies, right? Now, typically what we 

have done is we have required accredited-only investors to register, 

and they have self-certified. So they show up—— 

Chairman SCHWEIKERT. But now you can broadcast the message 

to a much larger audience, but your concern now is the certification? 

Mr. CURZON. Well, we have to be—we are put to a choice. If we 

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tify, and we would be telling the companies who are attending that 

we are relying on the old rules, right? And it would be that audience. 

If we don’t do that and we broadcast more broadly, then the risk 

is it would be deemed to be a general solicitation, and under the 

rules that apply to that, the way the SEC is talking under the proposed rules about the Form D filings, you could have a footfall. 

They could violate those inadvertently, or they could put themselves, by participating, into the now 506(c). Get it? 

Chairman SCHWEIKERT. Okay, I am tracking with you. But that 

still isn’t completely called out in the rule sets yet, is it? 

Mr. CURZON. No, it is not. So now it is a big, fat question. Our 

event is in March. 

Chairman SCHWEIKERT. You hit one of my fixations on the cost 

of future equity crowd-funding, if we ever finally get the full sets 

of rules there. 

Mr. CURZON. Right. 

Chairman SCHWEIKERT. How about something like the conference you do, actually controlling creating a crowd-funding platform? So you would become not only—trying to create the love connections at that type of conference, but also maybe even some of 

your smaller players to actually be a crowd-funding hub. 

Mr. CURZON. This is my personal opinion. This is not something 

that we talked about. My guess is we would say that is somebody 

else’s expertise. There are a bunch of companies out there exploring the ins and outs of becoming platforms. 

Chairman SCHWEIKERT. I just have a great concern that we find 

a way to template much of the mechanics of it, therefore to drive 

down the cost. 

Mr. CURZON. Right. 

Chairman SCHWEIKERT. Obviously, the first handful of players 

carry much of the regulatory presentation, graphing, cost burden. 

Mr. CURZON. Right, right. The other thing to know—I mean, my 

take on it is that the kinds of companies that will use the public 

crowd-funding mechanisms that are being discussed are not likely 

to be appealing to the growth investors, the angels and the venture 

capitalists who are seeking big company plays because of the dollar 

limits, the algorithm of the dollar limits and the number of investors that would be required, and the amount of money that would 

be required to build those companies. 

Chairman SCHWEIKERT. This is probably a different conversation. 

I have always thought it would be a great test, testing the waters, 

for proof of concept of an idea. 

Mr. CURZON. Maybe, maybe. 

Chairman SCHWEIKERT. But, we will see. 

Jacob, on your current venture, I have a dozen questions for you, 

and probably some of them are more appropriate offline. What talent sets have you had the greatest difficulty finding here in Arizona? 

Mr. NOJOUMI. Without a doubt, engineering. 

Chairman SCHWEIKERT. Okay. Now, is that engineering to give 

you a value on things you are trying to—I mean, is it the platform 

underneath? What type of engineering? 

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Mr. NOJOUMI. We are working with financial quants that help us 

with the algorithms for the depreciation. But the engineering we 

are looking for is PHP/MySQL engineers, how to work with hadoop 

and large database systems. That has been a real challenge for us 

here locally. I had to source talent from California, from Florida, 

all around the nation, but nothing locally. I visited with local 

groups like Gang Plank and was unsuccessful. 

Chairman SCHWEIKERT. Okay. So this is your system. You are 

building an SQL—— 

Mr. NOJOUMI. PHP/MySQL. 

Chairman SCHWEIKERT. Okay. All right. I keep forgetting I am 

a decade out of date from everyone. 

Mr. NOJOUMI. No worries. 

Chairman SCHWEIKERT. From when I used to write script. 

Second, the model of your business—and this is just sort of an 

aside—are you going to be using transactional data, something like 

the second markets of the world that are trying to find a way to 

take sort of everything that is out there in life and put it in some 

way where you can create a transactional connection? I mean, how 

do you do your valuation? 

Mr. NOJOUMI. Valuation consists of actual historical sales data, 

and we have recruited engineers who had a work history at Google 

to help us write SPDRs and APHRs and crawlers to crawl the Web, 

very much like Google does, extract data on valuations, and also 

a consumer contribution is another factor, and then financial 

quants are coming in to help us with the rates of depreciation for 

sectors and individual products. So, the combination. 

Chairman SCHWEIKERT. Have you ever met the folks at Second 

Market? 

Mr. NOJOUMI. I have not. 

Chairman SCHWEIKERT. Let me get an introduction there, because they are working very hard in trying to actually create a 

platform to actually do transactions on things you typically would 

not think are tradable. 

Mr. NOJOUMI. That is interesting. 

Chairman SCHWEIKERT. Next question. You are telling me you 

have had great difficulty in finding the engineering talent to build 

your database. How about the talent, like the gentleman sitting to 

your right, on being able to finance and potentially take your organization and set it up to go public one day, or however you choose 

to finance it? 

Mr. NOJOUMI. Well, I have traveled to California for that very 

purpose, to build relationships with these venture capitalists and 

with angel investors. 

Chairman SCHWEIKERT. You didn’t find any of those types of venture capitalists here in Arizona? 

Mr. NOJOUMI. Unfortunately not, no. What I am aware of is 

there is a limited number of these. I have done some research on 

a few of them and, unfortunately, one of them had a competing interest where Google Ventures was an investor, basically like online 

consignment, which isn’t a direct threat to us but it is in competition, so we chose not to go with them. That is why I have been to 

California and back so many times, is to build those relationships, 

SBREP-219 with DISTILLER

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and it is unfortunate that California is known as that hub and that 

ecosystem, and that Arizona is not. 

Chairman SCHWEIKERT. Have there been any particular regulatory hubs either from our state or Federal that have also caused 

you angst? 

Mr. NOJOUMI. Haven’t really worked on any Federal level as of 

yet, no. We bootstrap the company ourselves, the founders, and actually generate revenue before we get capital. 

Chairman SCHWEIKERT. Right. 

Tom, tell Jacob why he is wrong and why he could have found 

the VC here. 

Mr. GOULKA. I am Jim. 

Chairman SCHWEIKERT. I am so sorry. 

Mr. GOULKA. I don’t know the answer, because we haven’t 

talked. One of the characteristics in any market like this is that— 

in our example, because it is a good one, we look at 125 to 150 companies a year, and we will fund five of them, which is typical of 

angel groups around the country, which is typical of VC groups. So 

that means that if there are 150 companies and we fund five, there 

are 145 disappointed companies which, by definition, can’t find capital here. So there is always going to be a degree of discontent because it is a competitive environment and there are winners and 

losers, and there are a lot more losers than winners even within 

the context of capital that is available. 

The bigger issue, the more systemic issue that we have is that 

we are only 71 people. We have only been around for five years, 

six years in Phoenix, and our counterparts in Tucson are a little 

larger and a little older. But we are a very small subset of the total 

potential angel population in the state. 

Chairman SCHWEIKERT. Jim, and we sort of started to touch on 

this even before the hearing. Mechanically, you are mostly in the 

angel space, whether it be VC or private equity. How much talent 

do you find even beyond the money, accounting talent, legal talent, 

compliance talent? I mean, do we have a robust enough infrastructure underneath the money? 

Mr. GOULKA. In all those areas of expertise, we have a plethora 

of competence. In marketing, in sales, in go-to-market strategizing, 

in accounting, in legal, in IP, all of those activities we have lots 

and lots of very fine, very competent, highly qualified people to do 

that work. So we are not short of that. 

What we are missing is there is an issue about engineers in Arizona, and the issue ultimately is an engineer may work for a company for a year, working in a startup. You don’t know whether the 

company is going to be around for three or four years or five years 

or longer. So if you are a young engineer and you are looking at 

taking a job in a company that may only be there for 18 months, 

you have to look at where am I going to go from that job to the 

next one. You may have a hard time discerning the opportunities, 

the plethora of opportunities here for re-employment, and that becomes the beacon that Silicon Valley shines out into the world. 

They say you have lots of opportunities here. If the first one doesn’t 

work, we have the second and the third and the fourth. 

So the development of entrepreneurial businesses like his is an 

issue. We have to find ways of incentivising young people to stay 

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here, and the way you do that is really the second part, which is 

that they are not very well connected to each other. 

I have lived in 10 states, and this is the most disconnected community I have ever lived in. I could get anything done in New York 

in three phone calls, or in Washington, or in Chicago, or in Dallas, 

or in Minneapolis. I can’t do that here because I don’t know who 

to call, and I have been here for a few years. 

Chairman SCHWEIKERT. All right. Before I hand it to Congressman Gosar, I have to follow up. 

Tom, do you agree? 

Mr. CURZON. Yes. I would add the note that the engineering 

problem is actually a national problem. It is hard to find engineers 

everywhere, and their cost has gone through the roof. 

But, yes, we have a very fragmented in the sense of dispersed 

kind of ecosystem, lots of individuals in the rowboats rowing in circles. 

Chairman SCHWEIKERT. Okay. When we do our second round, I 

am going to come back to all of you and just say give me an idea, 

because I know we have a dozen different Chamber groups, industry groups, congressional offices that have been trying to find some 

way to create that sort of portal where we drive our people and our 

information through. Why are we failing? 

Congressman Gosar? 

Mr. GOSAR. Thank you. 

Jim, I want to come back to do you see only engineers as being 

the focal point of being what is inadequate about our system here 

in Arizona? 

I mean Tom. Sorry. 

Mr. CURZON. Yes. I wouldn’t even point to the lack of engineers. 

I think that is just a supply issue. A lot of my clients are solving 

the problem using virtual teams from all over the country and just 

using it over the Internet. 

I just spent an hour-and-a-half this morning brainstorming this 

issue with somebody, and our takeaway in part is that there is a 

lack of momentum of successes. Part of the getting people together 

and one success leads to another success, the kind of serial entrepreneur. A company has a big success, and then 10 people from 

that company go out and become angels and they invest in the next 

company, and then you just have this big ripple effect. 

We haven’t had a ripple effect since the late ‘90s, except occasionally, and as soon as we get one of those, I think we will see some 

really great things happen. One of the things in my notes you will 

see, or in my testimony that bears on this is the Arizona Commerce 

Authority’s Arizona Innovation Challenge Business Plan Competition is a big deal. In my opinion, it is a really big deal. And the 

reason it is a big deal, it is a semi-annual business plan competition, $1.5 million each time to typically six companies. It is not the 

winners that are the most important thing. It is that we have had 

810 applications in the last three years, which brings visibility to 

companies, most of those we never heard of. And now they are exposed to our mentoring systems and to investors to see and that 

kind of stuff. 

That is, I think—I think we are going to look back and it is going 

to be one of the most important things that will have happened, 

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and it is a momentum issue, right? It is getting the light of day 

on these so the investors will take their dough and put it out, and 

the winners. 

Mr. GOSAR. Part of that also comes back to big government dictating winners and losers. I mean, government is supposed to be 

fostering an environment to allow that to sort out. I mean, you 

made the comment that you have sorted out the streamlined process. It is not what government has been doing. It is what you have 

been doing on a solid business scale, and we have tipped that scale. 

Would you agree? 

Mr. CURZON. If government gets into the business of making 

those kinds of decisions, yes, that is not optimal. I think when you 

have—the way Invest Southwest works, the way actually the Arizona Innovation Challenge works, with a judging panel of investors 

where they are picking those—it is not a government picking 

them—I think it works best. 

Mr. GOSAR. Jim, do you like that? 

Mr. GOULKA. I do, actually. I have been part of the Innovation 

Challenge. I see how it works. The opportunity to get many companies that come out of—it seems like they come out of the woodwork. I mean, I have spent a large amount of my day, every day, 

seeking out companies as candidates for investment because our 

doors are open. We are looking for places to put our dollars. And 

the Innovation Challenge found many, many, many companies I 

had never heard of before, some of which have subsequently gotten 

funding from us. 

So it does work. That is an instance of utility here, because it 

was the big government enabling a bunch of investors to make the 

choices for the state capital to be deployed. So there was some risk 

involved there. 

To my mind, the issues really are staying out of the way, first 

and foremost. We don’t need a lot of rules to do what we do. To 

find opportunities for companies to grow, and particularly to attract other investors, the way that there can be good incentives 

coming from government are through capital gains tax credits of 

one sort or another. They do exist at the Federal level and do exist 

with the Arizona Angel Tax Credit in the state because those add 

an element of potential return to investors for taking the risks that 

they are taking. It doesn’t obviate the risk, but it says if the risk 

is successful, that there is a gain. So in that weighing of opportunity, of gain or risk, it tilts it properly and enables the person 

to take a better risk, and that will be attractive to people who have 

never done this sort of thing before. 

Mr. GOSAR. Is our economy and the composition of our business 

in the State of Arizona compared to others, does it preclude certain 

industries over other industries? 

Mr. GOULKA. Well, we were talking a little earlier about the importance that serving the needs of the population that has moved 

into the state over the years—a nicer way to say it than just real 

estate. But, in fact, we have seen enormous population growth for 

the last 60 years. It doesn’t take a genius to figure out that you 

can make money serving all those needs, whether you are building 

houses, building roads, building schools, becoming a teacher in a 

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school, working in a restaurant or any of those things, serving the 

ordinary needs of a massive influx of human beings. 

What that has done is it has made it so easy to make money in 

that fashion over most of the years that the more risky kinds of 

things such as startups, where you are creating something altogether new, like his business—it is altogether new; before he 

thought of it, there wasn’t that—that is a riskier thing. So that 

says to a person of means, I can take a high risk, and I can take 

a lower risk. Which should I do? Then it is about the kinds of returns for those risks. 

So, yes, I think we have had a skewed economy, but that doesn’t 

mean that it has been so completely skewed that nothing else exists. We have successes in technology. We have life science companies that are successful. We have software companies that are successful. We have GoDaddy, one of the most extraordinary stories 

around, that is right here, and it stays here. 

So we are not devoid of it. We haven’t developed it as well as we 

could. I call us adolescents in that. We have to work at developing 

them into a full-fledged ecosystem, and that is dealing with what 

I call the disconnectedness. 

Mr. GOSAR. By utilizing some of the spinoffs that we have seen 

out of TGen and ASU, do you think there is a better relationship 

that we should have with our major university partners in regards 

to looking at investment into spinoffs and new technology? 

Mr. GOULKA. I think the universities are working very hard at 

becoming good at a very difficult thing. Tech transfer is very difficult to do, even under the best of circumstances. If you look at 

Stanford and Cal Tech and MIT, and even Columbia, it is still a 

difficult thing to accomplish. How do you bring scientists and engineers and business people together? And in a university setting, 

particularly one that wants to find alternative sources of income, 

this looks like a good one. But the hurdles that we have in this are 

serious. 

The first is if I as a licensor require from you, a licensee, a large 

amount of money for a license on the front end, only the wealthy 

can afford that. If, on the other hand, that cost is lower, it makes 

it easier for small businesses to do this, and I can speak to this 

from personal experience. My software company is the result of two 

people, my partner and I, acquiring a license from NASA Ames of 

some software they built over a five-year period, and it was very 

easy to work with NASA, much easier to work with NASA than it 

is to work with ASU or the University of Arizona. So there is learning to be done in that tech transfer activity. 

The second part is the connections between scientists, engineers, 

and business people. Many people choose to be researchers in the 

university setting because they are not interested in business. So 

working on methodologies intramurally about this is a good thing 

to take your idea and commercialize it, it is not just about greed 

and all that, it is about taking your ideas and bringing it to a larger population and serving them, that needs to be done, and we are 

not very far along in that. 

Chairman SCHWEIKERT. Well, thank you. And I need to follow up 

on that one. It is because of the residual model, or is it the up-front 

cash—— 

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Mr. GOULKA. It is absolutely the up-front cash. That is the issue. 

Chairman SCHWEIKERT. Okay. So, let’s hunker down. So when 

you are going to do that licensing transfer, it is just the amount 

of capital up-front, and when you did your agreement with the 

NASA-developed software, that model was different? 

Mr. GOULKA. It was a very small up-front fee. 

Chairman SCHWEIKERT. And did they take a residual? 

Mr. GOULKA. Absolutely. We pay them every year for it, and that 

is fine because it is based on our revenues. So the more we grow, 

the better off they are, and that is the way successful licenses 

work. If we would have had to pay a quarter of a million dollars 

to acquire our license, we would not have acquired it. That meant 

the technology would be sitting on a shelf today, and there are 

businesses that have generated billions of dollars for their institutions, and it wasn’t from a billion-dollar up-front fee. It was from 

the success of the business made by entrepreneurs with some scientific new idea. 

Chairman SCHWEIKERT. It is interesting. I think REA and I, we 

had some meetings with ASU and U-of-A on this very similar subject. So it is going to be real high on the checklist. 

From your view of the world, and you touched on this in your 

opening statement, but I want to sort of bounce through them, 

506(c) and some of the improvements, changes, the solicitation 

rules—and you know I am not happy with what they have been 

doing on the credit investor mechanics and possibly now having to 

have a third party certification—where are you hitting your greatest concern, and would you believe for our angel investor community here in Arizona, where do you see your greatest legal liability 

right now when you are trying to put something together? 

Mr. GOULKA. The issue ultimately is how hard is it to do a transaction. And as Tom mentioned earlier, there are now additional 

costs. Some of those will be dollar costs, but some of it is simply 

the new disclosures of information that has never been disclosed 

before to third parties, whether it is an intermediary or an entrepreneur. 

So we have done transactions, private transactions. Self-declaration works. And when you think about this, when we do a transaction, first off, to become a member of our group, you have to selfdeclare as an accredited investor. Secondly, all the documents that 

I have ever seen for the closing of a private securities transaction 

require you to re-declare that you are an accredited investor, and 

there are legends in the documents that say you understand this 

is a high-risk investment and all that. That is easy. 

The problem is with the general side, you have to do more than 

that. The simple language for it is, well, if you want to do that, you 

have to provide your tax return or some simulacrum to somebody 

else. Initially, it is the entrepreneur. 

So I would just put it this way: Would you want to give your tax 

return to me, somebody you met an hour ago, and you kind of like 

my idea? 

Chairman SCHWEIKERT. You have seen some of the articles I 

have written. I am enraged about what the SEC is doing in regards 

to this whole category. How would you fix it? 

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Mr. GOULKA. I would say that it turns on two pieces. Piece one 

is, is an accredited investor simply somebody who has to provide 

a financial statement to somebody else, or is an accredited investor 

really a sophisticated investor? And you can define that differently. 

Chairman SCHWEIKERT. And that, I know, is sort of the fight 

that is going on, let’s call it discussion. The discussion that is going 

on out there is are you an accredited investor because you have 

this much cash in the bank or this much net worth, or are you an 

accredited investor because you have this much expertise in what 

you intend to invest in? Just because you may have had a great 

real estate deal doesn’t make you a brilliant engineer. You may be 

a brilliant engineer, but you don’t have $1.2 million in the bank. 

And we go around and around on this one now for almost two-anda-half years. 

Mr. GOULKA. The second part of it is, when we make our investments, we are writing a check, cash, for 100 percent of the asset 

that we are buying. We are not financing this. This isn’t like getting a mortgage for a building. This is buying a pen. I may be paying $25,000 for this pen, but I am writing this check now. So who 

is at risk? 

Chairman SCHWEIKERT. Okay. Forgive me for going off on a lark. 

What I have learned is, in D.C. particularly, there is a cultural 

split on the value of risk-taking. Much of what has made this country amazingly successful is a culture of risk-taking and the benefits 

that come from that. There is a fixation by many in Congress and 

in the bureaucracy that we need to create a risk-free society, and 

you see that if you have ever had to sit through a Financial Services Committee. Paul knows, because we talk about this all the 

time. 

If you create a big enough bureaucracy, you make it risk-free because there will be no transactions. You just stop them. Of course, 

there will also be no rate of return, no multiplier in the economy, 

and we flat-line. But there really is this sort of terrible fear of you 

take a risk, what if he loses money? And the same arrogance sort 

of works its way down into the accredited investor rules. 

A simple example I have is I have a very good friend, a brilliant 

engineer. He has a couple of friends who started a business that 

he actually sort of helped give them the idea. He is not allowed to 

invest in it because he is not accredited. They have already filled 

up the other. But he could walk in, and if they were listed as a 

mutual fund or other type of investment, or a certain private equity fund, he could invest. We have an absurd system right now. 

Paul, do you have any other questions? Because then I have 

some other more technical things. 

Mr. GOSAR. I have one more thing for Tom. It seems like what 

we see is a Federal Government ratcheting down the biosphere in 

which you function. Would you agree with that? And if you were 

to make a pitch to the Federal Government in regards to rules, regulations, what would you do in regards to that to make this a better application so that instead of an equal outcome, we just had 

equal opportunity? 

Mr. CURZON. Personally, I think one of the reasons that immediately preceding accredited-only mechanisms work so well, setting 

aside the definition of who is accredited—that is its own fight—is 

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that if, in fact, you had only accredited investors, it cured almost 

all sins. So you could put together that deal and you were pretty 

sure it was going to be fine because you had accredited investors. 

Now, an example of where we are now making it more difficult 

is under the new 506(c), even if you had sold only to accredited investors, if it turns out the government says, the SEC says that you 

didn’t conduct a reasonable diligence into those, you have violated 

the statute and you have a year ban on being able to fix it. That 

is just dumb. 

Chairman SCHWEIKERT. Paul, can I leap in on you just to that 

point? 

Mr. GOSAR. Sure, go ahead. 

Chairman SCHWEIKERT. So it is that liability tree that exists 

there. And as our official lawyer on the panel—— 

Mr. CURZON. It is not the liability that is bothersome. It is the 

uncertainty that causes people like Jim and me not to invest. What 

will happen is there will be more companies that won’t get investors because there are questions about that. 

Chairman SCHWEIKERT. If I can get that rule locked down and 

a crisp definition there, does that make a difference? 

Mr. CURZON. Make a huge difference. If entrepreneurs and those 

wanting to invest in those companies can have predictability about 

whether those target companies are clean or not, then you have 

eliminated an obstacle. Today, because of these changes, there are 

new questions about that company. So we are going to say, eh, I 

am going to pass on that one because I am not sure. They may 

have generally solicited and advertised in a way that there could 

be a problem, and we are not signing up for that. 

Chairman SCHWEIKERT. Okay. Paul, thank you for letting me 

step on you. But this is something we have been hearing. We have 

done some of these in other places, and this has become a focus we 

hear over and over and over. 

Mr. CURZON. That predictability is really big. 

Mr. GOSAR. When you hear these two gentlemen speak, coming 

from your perspective of looking towards the capital formation to 

start up a new idea, do you have any new thoughts listening to 

them? 

Mr. NOJOUMI. I believe it boils down to conversations and communication, talking about what is so important, and it is not just 

from a financial perspective or an engineering perspective. It is 

education, education from an institutional standpoint like ASU or 

high schools, but also grassroots, from the bottom up. So in corporations like GoDaddy that are established, I spent six years 

there, and Bob Parsons really grew this amazing company, a workforce that looked up to him and aspired to the American Dream of 

entrepreneurship. 

I know 2,000 people there right now who are dying to get into 

entrepreneurship. They just don’t know—they don’t have a road 

map. They don’t know what steps to take. They don’t know what 

resources are available. 

Mr. GOSAR. You saw what Tom was talking about in which they 

have that kind of expo. Shouldn’t that be something that is highlighted amongst the entrepreneurial community? 

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Mr. NOJOUMI. Absolutely it should be, and I think we need to 

take it one step further. I am not sure how often that expo takes 

place, but it would be good to have weekly workshops where entrepreneurs—industry calls them wonktrepreneurs. I am not a fan of 

that. But they can actually go to these, attend, and get a seminar 

or some sort of introduction to growth hacking or recruiting, which 

is huge for startups. It is a massive challenge. Or advice on institutional investors and how to raise capital, and how to form your 

company, the structure. 

Mr. GOSAR. Do you reach out? I mean, you are a pretty smart 

guy. Have you reached out to either of these two gentlemen? 

Mr. NOJOUMI. Unfortunately, I haven’t. I wasn’t aware and 

hadn’t had the pleasure of meeting either one of them. In terms of 

raising capital, fundamentally what we believe is our problems are 

our problems, right? So if we can’t solve our problems with the 

money that we bootstrapped with, I am not going to raise money 

to figure out how to go and solve my problems. So step one is to 

figure out my problems, find solutions, raise capital from an individual or entity that has expertise. And the deal flow is so limited 

here in Arizona, they don’t have the same expertise, unfortunately. 

Mr. GOSAR. But it seems like communication here is what is 

lacking. 

Mr. NOJOUMI. Yes. 

Mr. GOSAR. But it is a two-way street. It is not just from the top 

down. It is from the bottom up. 

Mr. NOJOUMI. That is correct. 

Mr. GOSAR. What kind of investigation did you do into those 

groups? 

Mr. NOJOUMI. I looked into—I did some Google searches. I 

reached out to some contacts of mine. I found 1,200 capital firms 

in Arizona. The largest one I believe was Great Hawk. I looked at 

their investments and their portfolio, and really what we are looking for is specific expertise along with the capital, and we couldn’t 

find that in Arizona. 

Mr. GOSAR. Did you approach them into an opportunity, or did 

you just review them on the Web? 

Mr. NOJOUMI. I reviewed them on the Web, I researched them 

online. 

Mr. GOSAR. Why wouldn’t you directly try to contact them to 

have some type of conversation? I mean, I understand diversified 

portfolios. So just because somebody does something over and over 

again doesn’t mean they are not receptive to new ideas. 

Mr. NOJOUMI. Right, that is very true. I didn’t reach out to them 

because we just weren’t actually ready to raise capital yet, and I 

thought if I was going to raise capital, I should probably target 

someone more informed in that sector. 

Mr. GOSAR. Jim, one last question. Tom made an aspect in regards to where we can go with this, between the state trying to 

grow this. Do you have any other ideas in regards to that? 

Mr. GOULKA. Specific to Arizona? 

Mr. GOSAR. I mean, somehow we are lacking here, and it sounds 

to me from your initial statements that we have this fixed group, 

and it doesn’t seem like it is growing very much. Am I quantifying 

that quite right? 

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Mr. GOULKA. Yes. We have as a challenge to reach out to other 

like-minded people that we are not in contact with already. That 

is one of our jobs. And I would not say that government is supposed 

to do my job for me. 

On the other hand, in New Mexico, part of the deals that went 

back to the vetting of the contracts for Sandia and Los Alamos required some effort on the part of the contractors to participate in 

early-stage technology development. I think TVC is the consequence of that. Years ago I met with people from there who had 

University of New Mexico people, Sandia people, Los Alamos people, and the venture community all participating together to try to 

identify the needs of the local entrepreneurial community, recognizing that most of the entrepreneurial activity was going to come 

from Sandia, Los Alamos, the University of New Mexico, and New 

Mexico State. 

So it was, if you will, government focused, because that is the nature of the state, but there is a page out of that book that we can 

take. We have major contractors here, and one of the characteristics of our community is that the major contractors in technology 

have a very, very limited interaction with the early-stage community here. You don’t find, like you do in California, in both Southern California and in Northern California, the big company, the big 

oak tree with all these acorns sprouting into new oak trees all 

around them, and a little incentive for that is part of the contract. 

To let them work out with the eagles I think would be a very valuable thing. It wouldn’t cost anybody any money. 

Mr. GOSAR. Would that be—in biotechnology, I see ESU over 

there, and I am just kind of interested along these lines because 

it seems like with biotechnology, being a dentist for 25 years, and 

the only difference between me and young folks is the price of my 

toys. But the whole future of medicine I think goes a lot through 

Arizona. Does that mean that there has got to be a better communication or a structure that is established with institutions like 

ASU? 

Mr. GOULKA. There is work going on in that that is pretty serious, Biodesign being the best example of that. BioInspire is here, 

BioExcel. We have a variety of entities that are participating in figuring out how to do that at the earliest stages, and it is now starting to work. 

The illustration I will give to you is that BioExcel funded six 

companies to a modest degree. Two of those companies made it 

through our screening process. Two of them presented to our membership for the next round of funding on the 12th of September, 

and both of those are in due diligence right now, one with a very 

large number of people. You are particularly interested in this, 

Congressman Gosar, given your background. And the other a 

smaller number. 

But we have serious interests now, and that was technologies 

that were—one technology actually came from another university. 

The other was originated at the University of Arizona. People are 

here being incubated in an incubator, advised by BioExcel, and now 

we are looking at it. So the steps are working right, but it is still 

very new. 

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Mr. GOSAR. And the last question. You just brought up these incubators. NAU has got one, Flagstaff has got one, ASU has got one. 

Are those the kind of a bridge that you are looking at as being fundamentally the thing that you are looking at for the future? 

Mr. GOULKA. There is a degree of fashion in that right now. 

There are lots of them growing up, and we will see the marketplace 

will prevail, and some will succeed and some won’t. But those that 

are doing a good job do a very good job. We see a regular flow of 

opportunity from them. We actually get members from our group 

as a consequence of NASA. So they can be very helpful. They are 

the kinds of places where entrepreneurs can go for a lot of the 

training. 

The third company that presented out of the three that we had 

on the 12th was at an incubator here. So all three of our companies 

that were selected to present to our membership out of the 25 were 

incubated. 

Mr. GOSAR. Thank you. 

Chairman SCHWEIKERT. Thank you, Paul. 

Something miraculous, we are actually exactly on time. 

The fact of the matter is, we are sitting in Skysong right now. 

I mean, this was the community and ASU’s venture to try to actually create a physical structure for what we are almost talking 

about. 

My last question is the one that always gets me in trouble. Tom, 

I am going to start with you. Well, you know, he is always picking 

the lawyer. 

From our offices, new members of Congress. From the institution 

that ASU is and being a very innovative—I mean, it is my alma 

mater. I believe in maroon and gold. So also what we have in the 

community. 

What do we do? What do we do to make it better? Is it something 

as simplistic as dramatically expanding the events where we bring 

people into the same room? Is it a much better registry of information? Is it just understanding it is going to work on many levels? 

If you were a policymaker, how do you make the access to capital 

for growth in this community work? 

And can I beg of you to pull the mic slightly closer to you? 

Mr. CURZON. Personally, I don’t think there is any silver bullet. 

I think a rising economy will make a world of difference. I think 

when people feel like they have money that they can invest and 

don’t have to be putting it away in a scared mode, they will be 

more inclined to invest. I think that is a piece of the puzzle. 

I think we should recognize that Phoenix and Arizona has made, 

in my opinion, enormous strides over the last three decades. The 

amount of infrastructure here, the amount of activity—we now 

have more than two dozen incubators. We have universities working very hard at this stuff. It is really hard stuff to do, and as you 

guys know, entrepreneurialism is all about failure. It is the pioneers with the arrows in their asses, not the settlers who came 

after. So that is the part that we are talking about. 

But if you have the rising tide, I think that provides the context 

for the successes that lead to the serial entrepreneurs. I think making it easier, not harder, to invest the capital—it is around the 

rules that we talked about earlier in the discussion. If we can make 

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the rules clearer, and less paternalistic would be a nice thing, but 

at least clear to be able to work around, I would do that. 

Chairman SCHWEIKERT. Okay. 

Jacob, almost the same question. From your experience of being 

one of those entrepreneurs, what would you change? What would 

you hope to see? What do you need, do you think, for us to grow 

in this marketplace? 

Mr. NOJOUMI. Let’s say, first and foremost, you identify and organize thought leaders that have followings, easier to reach. Instead of reaching 6 million people individually, you have six individuals who have a million persons following, right? A rough example. But you identify those leaders in the community first on a government basis level, and also in educational systems like ASU, and 

also in the entrepreneurial and private sector, and you align their 

focus, an initiative for an ecosystem for Arizona. So it starts with 

a conversation, align the vision. 

Secondly, we learn from other ecosystems that have proven to 

work—Boston, even Santa Monica right now. They are calling it 

Silicon Beach. Boston and Texas. So we learn what initiatives we 

have there, what support groups. 

I am working with a team called the House of Genius. They have 

14 locations across the world, and I was on their panel in Santa 

Monica and I thought what a great opportunity for Arizona. It is 

a safe environment for entrepreneurs to come pitch, and it is to an 

esteemed panel without the pressure of a make-or-break scenario. 

Working with them to bring them to Arizona, that is one example. I think it is a multi-faceted approach, and I don’t think it is 

the government’s responsibility to do it. I think it is their responsibility to organize and leverage the resources. 

Chairman SCHWEIKERT. Jim, sort of that same question. I know 

we have some great talent here, but I always have this fear that 

somehow we are all not ending up in the same room. What would 

you change? 

Mr. GOULKA. When people talk about Silicon Valley, they say, 

well, you get lots done there, everything happens there, and there 

is this vision of all you need to do is go to Sand Hill Road and say 

you are looking for money, and the VCs come out of their offices 

with their bags, ‘‘How much do you need?’’ And, in fact, VCs in Silicon Valley and the angel groups in Silicon Valley are just like we 

are. It is 5 percent get funded. 

There, they understand competition. Here, we have still an attitude of, well, I am doing this, so you should be giving me things. 

I hear that a lot. 

So what we need to have is an attitude like we are going to get 

in the big leagues, which means it is competition. There are winners and there are losers, and if you are a loser, as Tom said, failure is an important part of being an entrepreneur. You learn from 

being a failure. You don’t learn from your successes. 

So it is okay to fail, and it is even better to win, and we should 

extoll our big-time winners, which we don’t. So I am saying, at the 

same time, raise our standards. The last thing you want to be is 

the batting champion in Triple-A, not make it to the bigs. They 

don’t extoll themselves. Nobody is going to walk around saying, 

‘‘Look what I did last year, I was the best minor leaguer around.’’ 

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We want to be in the bigs, so we have to focus on helping the best 

get noticed and celebrated as our lions and say, yes, we compete, 

and we are going to compete with the best. 

Chairman SCHWEIKERT. Paul had one other thing. 

Mr. GOSAR. I only have one more question. 

Mr. CURZON. I think we have—of the competing companies? 

Mr. GOSAR. Mmm-hmm. 

Mr. CURZON. Sure. We ask them about their experience and their 

comments and suggestions. 

Mr. GOSAR. I am just real interested because a lot of times what 

you do to expand your universe other than raising the bar is by 

finding out from the applicant pool how did you find out about us, 

how did you find the process, what would you add additionally. It 

helps to attend where like minds gather. 

Mr. CURZON. A lot of times, if you are asking the 10 who presented, we try and follow up with them and see about their experience. If they were able to raise capital afterwards, they are happy. 

If they weren’t able to raise capital, you know, they are not happy. 

Probably the criticism we have had, in fairness, particularly in 

more recent years, is that our audience has not had enough investors in it, that we haven’t been able to attract the investors, and 

there are a couple of reasons for that, one of which is the number 

of investors nationally who are interested in early-stage investing, 

which is what we have mainly is early-stage stuff, has gone away. 

There are very few professional funds that actually invest in earlystage anymore because they either went up-market or disappeared. 

So, I mean, Congressman, we are actually in the middle of a 

pivot with the conference right now to try and address that very 

issue. We are working on it to make it more interesting and broader and bigger to bring in more companies, to have the benefit of 

the exposure and hopefully more investors because of responding to 

the kinds of inputs and our own observations, frankly, sitting at 

the conference, is trying to do something new and different. 

Chairman SCHWEIKERT. Thank you, Paul. That is actually where 

we need to go. 

We are going to wrap up the formal portion of this, and then I 

am going to ask if you would be willing to engage in something a 

little quirky. 

I also need to thank Skysong. Thank you for letting us invade 

your space. It is appreciated. 

I also need to thank our witnesses. 

On a personal level, I have a personal fixation on—I mean, in 

our office, we have actually been trying to create lists of people 

that do compliance accounting. We have had some great success 

with drawing some big REITs here, some more folks who are managing private equity out of this community. Now I need this community to start knowing each other and see if there is a level of— 

what is the term?—cross-pollination there, building, as you used 

the term, ecosystems. 

One of my other frustrations is we had a great success with the 

JOBS Act. We proved we can do bipartisan legislation all the way 

through the process. And then I have my brothers and sisters on 

both sides of the aisle absolutely flabbergasted we are heading to 

two years of rule sets coming from the very bureaucracy that talks 

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about helping us, and we are supposed to be creating job growth. 

Who would have ever thought we would lose the momentum in the 

bureaucracy? And that is why many of us have played with the 

idea of what do you have to draft in a JOBS Act 2.0—I was told 

I would get in trouble for using that title—to either clean up the 

definitions, fix the tree of liability and things like crowd funding, 

and also take away the SEC’s ability to take two years to do something that should be simple in rule sets. 

Maybe we have to be much more definitive in saying it will be 

in this fashion. I think that is actually the future of where the legislation is going to go as we sit and work on the details of that. 

And with that, I ask unanimous consent—and considering it is 

only you and I, you had better not argue with me—that any submitted or supporting materials be made a part of the record. 

Without objection? 

One day he is going to go, ‘‘No.’’ 

Also, to our witnesses, be prepared over the next couple of weeks, 

there is a very good chance we may send you a couple of other 

questions to sort of fill in where either the question didn’t get us 

where we needed, some bits of information, or something else has 

come up. 

And with that, the hearing is closed. 

[Whereupon, at 2:14 p.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

Testimony 

Of 

James Goulka 

Managing Director 

Arizona Technology Investor Forum 

To the 

Subcommittee on Investigations, Oversight and Regulations 

Committee on Small Business 

U.S. House of Representatives 

Scottsdale, Arizona 

September 23, 2013 

Chairman Schweikert, Members of the Subcommittee on Investigations, Oversight and Regulations, staff, ladies and gentlemen, 

my name is James Goulka. I reside at 2525 W. Lompoc Avenue in 

Mesa, Arizona. I am the Managing Director of the Arizona Technology Investor Forum, a 501(c)6 entity comprised of 71 accredited 

investors who collaborate on finding, evaluating, and investing in 

early stage technology companies. In the 6 years of its existence, 

we have invested over $7.25 million of our own money in 29 companies, 24 of which are based in Arizona. Together with our counterpart, Desert Angels in Tucson, we are by far the most active investors in early stage companies in the state. It is an honor to be here 

to offer my testimony to the Subcommittee. I will be brief. 

Most people acknowledge that small businesses drive American 

job creation and innovation. Whether providing a new cancer diagnostic or a mobile phone app, opening a taqueria or doing contract 

manufacturing, small businesses hire people, lease space, buy services, and pay taxes. 

I want to focus my comments today on a subset of American 

small business: startups. These are the creation of one, two, or 

three individuals, who take the exceptional risk of taking something that doesn’t exist—an idea—and making it into a reality that 

solves a problem in a new way, causes new ways of behaving, or, 

simply, makes life better. 

These businesses start out by the investment of time and energy 

from the founders—so called ‘‘sweat equity’’—and the capital they 

can contribute to their new enterprises. Few founders are wealthy: 

most are middle class; many are young. They use hard-earned savSBREP-219 with DISTILLER

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ings to start their businesses and live frugally. As they need capital 

to buy equipment, lease space, pay other people providing them 

services, they tap their friends and family members who may not 

know their business idea, but they do know the founders. 

Occasionally, a startup can grow sufficiently to generate sales 

and profits with no additional capital. Such businesses usually 

serve a gaping need of a customer group for a pre-existing service. 

These quick successes strengthen our economy and are the bedrock 

of our local communities. 

Others, though, are more uncertain: they may disrupt current 

practices, they may propose solutions that have never existed before, or they may be creating new market niches. These are the engines of innovation. Think Facebook, Amgen, or, more locally, 

GoDaddy, Infusionsoft, or Medicis. 

These startups, with high potential but equally high risk, soon 

run out of capital from their friends and families and have to turn 

to outside investors. In some situations grants, such as SBIR funding from federal agencies or Innovation Challenge Grants from the 

Arizona Commerce Authority provide important early capital to 

these businesses. 

For capital beyond these sources, founders and other entrepreneurs turn to outside investors, people and institutions with 

capital resources they intend to invest to achieve economic returns. 

The most obvious sources of funding for businesses are banks. 

But, for more than simple transactional offerings like checking accounts, startups are not attractive to banks because they do not 

meet the banks’ fundamental credit criteria. Startups, by definition, have no history, and are completely unpredictable. Most have 

no profits or collateral. Most entrepreneurs have little personal history with a bank, many have no previous experience as founders, 

and few are willing or able to provide personal guaranties on loans 

to their companies. Startups are, in reality, unbankable. And 

American taxpayers, having experienced the financial meltdown of 

the past several years, are not enthusiastic about banks taking on 

this kind of risky business. 

We do have investors who are interested in providing capital to 

this segment: individuals, generally referred to as angels, and institutions, generally called venture capital firms. These are sophisticated individuals and firms who are have the capability to assess 

the risks of new enterprises, make judgments about them, and accept what they hope are reasonable risks in return for acceptable 

returns. Importantly, they understand and accept that the risk of 

total loss of an investment in any private startup is high. 

In late 2013 venture capital firms tend to manage funds sufficiently large that they rarely invest in funding rounds of less than 

$2 million. Angels, whether investing by themselves or in groups, 

are the principal source of funding for entrepreneurs seeking their 

first rounds of outside capital in lesser amounts. The Center for 

Venture Research estimated that angels invested $19 billion in 

35,000 US companies in 2008. And that was the year when the financial crisis hit. 

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A major intent of the JOBS Act of 2012 was to increase the opportunity of American startups to raise capital by enabling more 

people to invest in them. This meant addressing two issues: (a) redefining who could invest in the securities issued by startups; in 

other words, redefining an angel investor; and (b) changing the 

rules on how startups—the potential issuers of private securities— 

communicate with those potential investors. 

Solicitations—Private and General 

Rule 506 of Regulation D that governs the issuance of private securities had come to be seen by some as a constraint on the ability 

of issuers to reach potential accredited investors whom they do not 

know in advance. To address this, the SEC recently subdivided 

Rule 506 into two sections: 506(b) deals with purely private transactions, and the new Rule 506(c), which relaxes the constraint and 

enables issuers to publicly advertise their issues—do a general solicitation—in the hope of attracting those unknown investors. In 

exchange for the freedom to advertise, the issuer must now meet 

an array of requirements and take the ‘‘reasonable steps’’ to assure 

itself that the investors are accredited. 

Definition of Accredited Investor 

Regarding the definition of angel, most angels fit the SEC definition of ‘‘accredited investor,’’ which means meeting a net worth test 

(of $1 million not including a residence) or an income test (of 

$200,000 in each of the previous two years for a single person. That 

number increases to $300,000 for married persons). The intent of 

the Securities Act of 1933, was to protect the general public from 

unscrupulous promoters who might cajol unsophisticated individuals into making investments in spurious companies. The concomitant though was that a sophisticated investor could fend for himself, which he or she would do by careful evaluation of opportunities, collaborating with likeminded investors, and understanding 

the risks involved. He also has the ability to absorb loss. 

Over the past 80 years, the practice arose among angel investors 

of self-declaration of accredited investor status. This usually takes 

the form of a document wherein an investor identifies how he/she 

qualifies as accredited. I have attached the form that the Arizona 

Technology Investor Forum requires of all members. Most organized angel groups such as ours use a form substantially identical 

to this. Furthermore, the documents relating to every privately 

issued security that I have seen includes a substantially similar 

statement by each investor. This means that at every investment 

action, each investor restates his/her status as an accredited investor. And further yet, the securities documents of a private issue 

contain legends clearly stating the riskiness of an investment in 

those securities. Combined, these make compelling arguments that 

angels, especially within organized angel groups, but also experienced independent investors, know what they are doing, understand the risks, and meet the intent of the words ‘‘accredited investor.’’ 

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One would think, then, that the sheer scale of tens of billions of 

dollars invested by angels each year and current accredited investor practices prove that the system works and would form the baseline for any expansion of the definition of an investor who could invest in privately issued securities. Presumably, that is the case for 

purely private solicitations under Rule 506(b). 

However, the effect of the new rules issued by the SEC in Section 

506(c) of Regulation D that go into effect today create serious impediments for the same angels to invest in new issues by private 

companies if the means of communicating the opportunity is different, i.e. by general solicitation: 

(a) If accredited investors consider investing in a private security which meet the test of a general solicitation, they may 

be required to provide to the issuer of, potentially, a third 

party private, highly confidential information in order to buy 

something for which they are paying 100% cash at the time of 

purchase. 

This contains the absurd notion of an investor disclosing his/ 

her tax return to a relatively unknown person in advance of a 

transaction that may or may not close. Alternatively, if an 

intermediary is used, new costs are added to a transaction. 

These could be substantial, especially given the uncertain requirement for periodic updates. And that does not obviate the 

potential lost privacy or harmful subsequent disclosure. Many 

angels polled on the subject state that they will refuse to provide the kind of information required. Thus the rules needlessly shrink the pool of existing investors. 

(b) The onus on collecting that information is placed on the 

issuer of the securities, with serious sanctions on the issuer if 

it does not fully comply with these requirements. This includes 

the potential prevention of fundraising for a year, which would 

effectively destroy the issuer. 

When considering a general solicitation, an issuer now has to 

weigh the potential benefits of attracting new investors against the 

costs, most importantly the improbability of reasonably satisfying 

itself and the SEC that every one of its investors is accredited. In 

my view, if investors are required to provide the personal information, they will not invest in a deal that is generally solicited. The 

purpose of relaxing the prohibition on general solicitation will have 

been defeated. 

Fortunately, the SEC included in its rule-making the provision 

for verification through a ‘‘Principles-Based Approach’’ which 

contextualizes the investors by their experience, previous knowledge of the person(s), the minimum scale of an investment, and 

other elements. Ambiguous now, I recommend that this section be 

more thoroughly defined. There is, in my view, an opportunity to 

define accredited investor by the traditional self-declared method, 

supplemented by observations of actual experience, such as previous investing in private transactions and by education in high 

risk investing. For both of these, organized angel groups such as 

the Arizona Technology Investor Forum, provide structured and 

thorough opportunities and programs. Illustrative of this are our 

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multi-step screening process in which nine experienced investors 

vet all candidates to select the few that members are shown; our 

Sidecar Funds, which enable new investors to learn by following 

others, and by our education programs, such as the Valuation 

Workshop created by the Marion W. Kauffmann Foundation which 

we are bringing to the membership in October. The Angel Capital 

Association has provided input to the SEC on how organized angel 

groups such as the Arizona Technology Investor Forum work and 

suggest formalizing membership in an organized angel group as 

sufficient verification of accredited investor status. 

Until the rules clear further, the Arizona Technology Investor 

Forum will limit consideration to private solicitations only, thus ensuring that our members do not find themselves accidentially in 

situations where they do not wish to be. 

These issues are particularly important for Arizona. In our state, 

we have few venture capital resources, so angels, especially organized angel groups such as Arizona Technology Investor Forum and 

Desert Angels, are a critical part of the state’s technology ecosystem. Together, we are about 170 investors. Arizona needs, if 

anything, more angels investing here, so the rules should help attract new investors, not dissuade them from participating. 

Thank you for your time and willingness to listen to my testimony. 

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Building an Ecosystem; Access to Human Capital 

Good afternoon Congressman Schweikert, Chairman Graves, and 

the esteemed members of the Small Business Committee. My name 

is Nima Jacob Nojoumi and I come from a long lineage of entrepreneurs. I am the Co-Founder and CEO of itsWorth.com. I recall 

when Shad Nojoumi initially approached me with the concept for 

our big data startup: He said, ‘‘Nima, I want to valuate the world.’’ 

That statement put a smile on my face. After doing thorough research I came to the realization that there is no reason why, with 

the technologies available today, we couldn’t create the world’s first 

valuation engine. The concept both simple and powerful: An engine 

that provides users with up to date, real world, financial values of 

virtually anything and everything. itsWorth.com is the ‘‘Goggle’’ of 

values. We’re on a mission to provide an unbiased valuation of the 

world where people can contribute and feel empowered to make informed buying and selling decisions. 

My three best friends and I, who at one point were all colleagues 

at GoDaddy, decided to pool our life savings and take the chance— 

to live the American Dream. Today we have 8.4 million products 

in our database and are six weeks from releasing our Software-asa-Service platform. We are grateful for generous local experts like 

Tyler Rives from Silicon Valley Bank in Tempe and Evan Gilbert 

at Polsinelli Law Firm in Phoenix that have positioned us for success. I have traveled to California ten times this year to gain access 

to advisers and talent, and to build relationships with angel investment groups and with the venture capital community. It has been 

a long and hard journey. I am here to say entrepreneurs in Arizona 

should not have to leave the state to gain access to human capital. 

The time is right. Arizona has an emerging startup community. It 

needs to develop, mature, and grow up fast. That is the problem 

and the opportunity. 

Fortunately for us there are celebrated experts that have outlined structures, systems, processes and the social architecture to 

build an ecosystem. I cite Dr. Barry Stein’s 1974 MIT dissertation: 

‘‘Human resources are the wealth of nations; each nation has the responsibility as well as the need to develop and conserve them. But 

human resources are not the simple equivalent of physical persons, 

as mere existence does not automatically create human beings. 

Rather they develop through participation in social life.’’ 

Mr. Mark Tomizawa, a strategist and entrepreneur has invested 

the past 5 years developing social architecture to deploy in real 

time. And I quote him, ‘‘As for the ecosystem, we need freedom, support and know-how as individuals at work, in school and in life to 

do the right thing. That means more humans supporting each other, 

live and in real time. That means passing knowledge, mindfully, 

from generation to generation. That is part of how a healthy society 

is defined.’’ 

I am here to say that as a state we are leaving money and opportunity on the table. We can and we must do better. We must coordinate better and connect the dots more strategically. The standSBREP-219 with DISTILLER

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alone organizations must join forces to create an ecosystem of opportunity, an ecosystem of human and financial capital, an ecosystem of local job creation. We can and must become know as a 

great state where great ideas come to life. To cross the chasm from 

communities to ecosystem we need to leverage existing resources, 

like thought leaders such as Dr. Stein & Mr. Tomizawa and bridges 

to work on an integrative level. Tyler Rives, Evan Gilbert and I are 

examples of bridges. We naturally connect people to resources and 

initiatives. I believe conversations like these are essential and will 

serve as a catalyst for change and growth. I am not asking the 

Small Business Committee to create solutions; I am asking that 

you leverage and organize existing capital, whether it is human or 

financial, to give entrepreneurs the opportunities they need to meet 

today’s evolving market conditions and to remain loyal residents of 

the great state of Arizona. 

Thank you to the esteemed members of the U.S. House of Representatives Small Business Committee, Congressman Schweikert 

and Chairman Graves for the honor to speak today. 

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Testimony of Thomas H. Curzon 

Before the House Committee on Small Business 

September 23, 2013 

SkySong Innovation Center 

Scottsdale, Arizona 

Thank you, Mr. Chairman and Members of the Committee. 

I am pleased to appear before the Committee today on behalf of 

Invest Southwest to tell you about The Invest Southwest Capital 

Conference (Invest Southwest) and its place and role in the Arizona 

entrepreneurial ecosystem. By way of background, I am a senior 

partner with Osborn Maledon, a 50-lawyer Phoenix law firm dedicated exclusively to the Arizona marketplace. Our corporate practice focuses on representing entrepreneurs and growth companies, 

anywhere from zero revenues to over $200 million in annual revenues, and anywhere in their life cycles, and we have special expertise with start-ups. So we’ve assisted companies in angel 

financings, venture financings, buying and selling companies, IPOs 

and exit transactions and everything in between. And as part of 

our commitment to Arizona, we have been deeply involved in the 

Arizona entrepreneurial ecosystem, and I personally have been for 

about 33 years. 

To that end, our firm was one of the founding firms of Invest 

Southwest in 1992, which was then known as the Arizona Venture 

Capital Conference, and I have personally been involved in it since 

the mid-1990’s, including serving as Chairman of the Conference 

for 2006–07, and currently I am on its Board of Directors. The Conference itself is a nonprofit corporation, and is the principal early 

stage investor conference in Arizona. It is organized and run by 

volunteer service providers and entrepreneurs who are keenly interested in having a flourishing entrepreneurial ecosystem. 

The Conference was originally founded in 1992 as a conference 

focused exclusively on attracting venture capitalists to Arizona to 

potentially invest in our start-ups. Historically, the typical structure of the Conference has included using a selection committee 

made up predominately by venture capital investors to select from 

a pool of applicant start-ups ten to 12 companies who then were 

groomed to present 10 minute pitches to the investor audience at 

the Conference. In 2004, after the Dot Com Bust, and the resulting 

dramatic fall off in venture capital investing throughout the US, we 

restructured the Conference for 3 years to focus on presenting to 

angel investors rather than venture capitalists, and then when the 

venture capital industry began reviving, in 2006 and 07 we restructured again into what is now known as Invest Southwest and 

began focusing on connecting the region’s most promising startups 

and emerging growth companies with an audience of angel investors, venture investors, entrepreneurs and service professionals. In 

other words, we were focused on the stage of company development 

of most of the companies then prevalent in Arizona (being relatively early stages) and the investors who were interested in that 

company stage, which was a mix of angels and venture investors. 

To date, we believe presenting companies of Invest Southwest have 

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received more than a quarter billion in investment dollars since the 

inception in 1992. 

The Great Recession has, of course, dramatically affected the entrepreneurial ecosystem in Arizona and, just as following the Dot 

Com Bust, early stage venture capital has become much more 

scarce. Happily, this time around, though, the angel investment 

community has been actively filling the gap, particularly under the 

leadership of two leading angel groups, Arizona Technology Investors Forum (ATIF) in Phoenix and Desert Angels in Tucson. In addition, in the most exciting development in a number of years in 

our space, Arizona is now the home of the largest (by aggregate 

grant award amount) business plan competition in the United 

States. This program, known as the Arizona Innovation Challenge, 

is put forward by the Arizona Commerce Authority (ACA), and 

takes the form of two competitions annually, each awarding up to 

$1.5 million in total grants (typically in the form of 6 grants of 

$250,000 each). Prior to the current cohort, there have been more 

than 800 applications to participate in the competitions. The judging process is accomplished by a pool of more than 50 volunteer entrepreneurs, investors, executives and other experts from our ecosystem who are giving back to foster capital formation and employment growth in Arizona. The fifth cohort of the Challenge is now 

in process. 

In my opinion, the importance of the AIC competition cannot be 

underemphasized. Certainly the cash awards are significant to the 

winners. But it is equally significant that the competition is bringing public attention to hundreds of new companies and helping to 

connect them with resources available in the ecosystem, including 

programs such as ACA’s Venture Ready, which are designed to 

help groom promising companies in the competition for future successes of all kinds. 

Because of this significant flow of companies, Invest Southwest 

and the ACA are partnering together for the upcoming Invest 

Southwest conference and will be launching an innovative new 

event format designed to help Arizona better address current market conditions and continue the growth of its ecosystem. We have 

noted the recent Kaufman Foundation report showing that in 1990, 

Phoenix did not show up in the top 20 metropolitan areas for high 

tech start-up density and by 2010 we have found our way to 13th 

largest on that list. We at Invest Southwest believe that through 

the continued efforts of the Conference, ACA, the Arizona Technology Council, the numerous incubators and accelerators we now 

have, as well as the contributions of ASU, UofA and Thunderbird, 

and others, Arizona will continue to make important gains as a 

place where businesses will continue to be created and thrive at an 

increasing pace. 

I will be pleased to answer questions and discuss the above matters with you, or relating more generally to start-up activity and 

financing in Arizona. 

Æ 

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