During the fifth annual Converge Tech Summit held during the WM Phoenix Open on Wednesday, famed startup investor and entrepreneur Peter Thiel said the ongoing pandemic and the rise of remote work will plant seeds of innovation all over the country.
Thiel said the country has been undergoing a giant reset, and people working in tech and living in expensive cities such as San Francisco are realizing that their work can be accomplished elsewhere.
“There's not going to be a single new Silicon Valley, I think it’s going to be decentralized, distributed,” he said. “It'll be somewhat different, it won’t be strictly replicating what worked in Silicon Valley. But maybe you can avoid some mistakes that were made.”
InvisionAZ hosted the summit, which drew a crowd of entrepreneurial talent and Valley dealmakers. The event was held at a temporary venue at the Phoenix Open overlooking the sandtraps and fairway of the 17th hole.
This year’s event was headlined by Thiel who spoke on stage with University of Arizona President Robert Robbins. Their conversation was wide-ranging, addressing macroeconomics, inflation, cryptocurrency (Thiel likened Bitcoin to gold, saying it is not a payment solution), virtual reality, the follies of higher education and the future of work.
Converge Tech Summit - February 9, 2022
Chief among the mistakes made in Silicon Valley that Thiel cited were zoning and its impact on housing affordability. While the fortunes of many have risen in San Francisco and the surrounding cities, housing prices have followed suit, ballooning to among the most expensive in the nation.
Thiel said the key for the next batch of startup sprouting cities is to consider the basics, like addressing housing availability and other issues at the will of local governments.
“The sort of local governance that really broke down in Silicon Valley. There was this incredible tech boom, this incredible gold rush and nobody paid attention to all the local government spaces,” he said.
Government and politics appear to be top of mind for Thiel these days; When it was announced that he would step down from the board of Facebook parent company Meta earlier this week after 14 years, sources close to Thiel reportedly said the move would give him time to focus on influencing the coming midterm elections.
Blake Masters, a Republican candidate for Senate who is looking to unseat Mark Kelly in November, is close to Thiel, previously working at Thiel Capital and the Thiel Foundation. And Jack Selby of InvisionAZ, the group that organized the Converge Tech Summit, previously worked as an early employee at PayPal and also works at Thiel Capital.
Massive VC fund in the works
InvisionAZ was organized back in 2017 and the nonprofit has put on a tech summit each year since, barring a pandemic hiatus last year.
InvisionAZ is also organizing a venture capital fund, one which Selby said will be the largest fund in state history.
The fund has not closed yet, but it already has $25 million on hand from Pinnacle West Capital Corp., the parent company of APS, which was seeded the fund in 2020.
A public filing with the Securities and Exchange Commission made last August said the InvisionAZ Fund I had raised $49.5 million and on Wednesday Selby said the fund will end up being around $100 million. InvisionAZ has already participated in one funding round, which happened last year.
The organizing principle behind the InvisionAZ fund, Selby said during the summit, was to ensure that growing companies in Arizona have the resources they need to keep growing.
Arizona Tech Investors and Desert Angels have helped seed many successful ventures in the state, but the ecosystem lacks a local investor that can consistently write checks worth millions.
CampusLogic founder Gregg Scoresby and SmartRent founder Lucas Haldeman described their fundraising journeys during a panel discussion on Wednesday and both said they had to look to out-of-state investors to help their companies scale.
The good news, at least for founders of the future, is that founders like Scoresby, Haldeman, Hamid Shojaee and many more are taking their gains and reinvesting it back into local startups. And as companies grow and find success, employees will venture out on their own to help other startups grow or build their own.
While the Arizona startup and innovation ecosystem is undoubtedly on the rise, Selby said it’s still too early to say that the state has a strong sector identity. The state has a strong track record in edtech and proptech, but the coming years will help shape the ecosystem’s identity and reputation.
