Rise of the Rest contest brings venture capital to Phoenix
by Christopher Silavong | Arizona Republic/azcentral.com, Oct. 13, 2016
Steve Case, CEO of venture-capital firm Revolution, addresses the audience at the Rise of the Rest competition in Phoenix.(Photo: Christopher Silavong/The Republic)
At the Duce in downtown Phoenix, contestants in a “Shark Tank”-style competition walked on stage like prize fighters. A man held up a small whiteboard as if each presentation was a round of boxing. Startups pitched their products to a panel of judges, and after eight rounds, one company left with $100,000.
The Rise of the Rest competition is the brainchild of Steve Case, co-founder of AOL and CEO of venture-capital firm Revolution. Phoenix was the last city on the contest's five-day tour, which ended Oct. 7.
The mission, Case says, is to “level the playing field so that everybody has a shot at the American dream” by taking the competition to “the rest” of the country to show there are untapped entrepreneurial communities waiting for investment.
“Right now 75 percent of venture capital goes to California, New York and Massachusetts,” Case said. “And 90 percent went to white men.”
According to a recent PricewaterhouseCoopers Money Tree Report, Arizona has received about 0.35 percent of total venture capital investments in the U.S. since 2013. The grand total of investments in the U.S. in the same period, according to the June report, was $169.2 trillion.
Compared with the other four states on the tour, Arizona is ahead of Nebraska and New Mexico by about $400 million in investments, but behind Utah and Colorado by $1.5 billion.
Bringing the tour to Phoenix
This is Case’s fifth tour; the first started May 2014. The Rise of the Rest put a call out in June for nominations.
“Phoenix had more interest, more momentum and more people asking us to come,” Case said. “The enthusiasm here is palpable.”
The organization primarily responsible for attracting the tour to Phoenix was #yesphx, a loose collective of entrepreneurs who help one another, according to founding member Johnathan Cottrell.
Cottrell said the tour was in line with #yesphx’s mission to “support a movement of entrepreneurs in Phoenix and across the country.”
“We had the most city nominations, and we had the most startups apply for the pitch competition,” Cottrell said.
It was a packed house.
Eight startups made their pitches in front of an audience of several hundred people, Case and four guest judges:
- Christine Jones, an Arizona politician and former executive vice president of GoDaddy in Scottsdale.
- Manan Mehta, co-founder of Unshackled Ventures in Silicon Valley.
- Chris Hughes, vice president at Revolution in D.C.
- Annette Zinky, executive vice president of strategy and impact for the Greater Phoenix Economic Council.
The winner
NeoLight won the Rise of the Rest competition in Phoenix. Company founders and judges pose with Steve Case (in blue) and a giant check for $100,000. (Photo: Christopher Silavong/The Republic)
Scottsdale-based medical-device startup NeoLight LLC, founded by ASU graduates in 2014, won for Skylife, a lightweight, portable device the company hopes will make treatment for infant jaundice affordable and accessible around the world. The other competitors were Ava School Solutions, CBL Worldwide, Crowd Mics, Hopscratch, MSDx, ReplyBuy and Smart Brain Aging.
“The win goes to all of our team for working really hard to get us where we are today,” NeoLight CEO Vivek Kopparthi said. “I was among some highly competitive companies, and I was humble to be in the lot.”
Kopparthi expects FDA approval for the product by the end of the year and plans to use the money from the competition to bring Skylife to market.
“Rise of the Rest put Phoenix on the map and highlighted us,” Kopparthi said. “I believe that this is only the beginning, and, going forward, we are going to knock it out of the park.”
Push to reach the 'top tier'
Before the competition, Case and Arizona State University President Michael Crow discussed the opportunities for startups in Phoenix.
“Clearly (Phoenix) is an example of a city rising to become more entrepreneurial and much of that is because of Michael Crow,” Case said.
The country won’t be successful, Crow said, if “just a handful of places” — Silicon Valley, New York City and metro Boston — possess an “entrepreneurial culture and ecosystem for innovation and startups.”
Case said the city is sprouting new industries because of a need to diversify from a concentration in real estate.
ASU President Michael Crow (left) and Revolution CEO Steve Case, with Rise of the Rest Director of Investments Anna Mason, answer questions from audience members at the Duce in Phoenix. Case and Crow talked about what can be done to make Phoenix an epicenter of innovation. (Photo: Christopher Silavong/The Republic)
“From what I understand, (Phoenix) learned a lesson 10 to 15 years ago by having too much of its focus in real estate, resorts and golf courses,” Case said. “I think that kind of hit a wall.”
Case was mostly enthusiastic about the potential for Phoenix but said he could not predict which cities would become entrepreneurial hotbeds.
Local businesses and startups must develop a culture of cooperation to raise Phoenix from “the second tier, which is where it is right now, (into) the top tier,” Case said.
Phoenix needs to follow three “I’s” to flourish, according to Case:
- Interconnection: The size of the Valley spreads out entrepreneurs, so it's important to stay in contact with one another.
- Impact: Develop and innovate products, outside of mobile-phone apps, that could change the world.
- Inclusive: Take advantage of Phoenix's diverse community and include women and minorities.
“It’s a problem everywhere in the country, but Phoenix has an opportunity to lead the way as the most inclusive private startup community,” Case said.
“Phoenix is a place where a new kind of American city can be born, and we’re trying to help facilitate that,” Crow said. “If at the end of the day you can’t find (business) connections, email me. I’ll find some way to connect you.”