Why I invested in the Arizona Founders Fund

Why I invested in the Arizona Founders Fund

Earlier this year I invested in the Arizona Founders Fund (AZFF.co), a new seed-stage venture fund that invests in early-stage software companies in Arizona.

The fund has already made five investments in promising Arizona SaaS companies. AZFF also connects our experienced tech founders with the next generation of startups.  

Here’s why I invested in the Arizona Founders Fund:

The focus is early-stage SaaS companies

Software businesses are different than non-technology businesses, especially in the crazy early stages. We need more support for the big-thinking crazy entrepreneurs who will create the next generation of large software companies here in Arizona.

Romi Dhillon is the the managing director of the Arizona Founders Fund. He is an experienced venture investment manager who deeply understands the early-stage growth game of modern SaaS companies. Romi has been an early-stage investor and has worked in the Salt Lake Valley technology ecosystem in the early days before it got big and was named “Silicon Slopes.” He knows the same growth can happen here.

The AZFF is the only investment fund focused on software companies in Arizona, particularly early-stage “seed level” ventures between startup and scale-up. AZFF speaks SaaS.

It’s called “Arizona Founders Fund” because it was funded by founders of successful Arizona software companies who see the same untapped opportunity here. These founders include Clate Mask, Scott Martineau and Eric Martineau (the three founders of Infusionsoft), Mario Martinez, Hamid Shojaee, Jason Kimball, myself and others.

The focus is Arizona

I know it’s possible to create successful companies in Arizona. I spent 30 years in the software business and helped grow three startups into global software companies, including two VC-funded companies here in Arizona that grew to more than $100 million in revenues. (I was a co-founder of SalesLogix and CMO of Infusionsoft.)

I see many promising local ventures that are growing fast and moving up the ranks on Gregslist of Arizona software companies. I know over 100 local founders and have helped many of them in their businesses. It’s not Silicon Valley, but there are winners here who are doing big things. Why wouldn’t I want to be part of that upside?

The AZFF is not a charity. It’s an investment fund that looks for the best potential investments in the state and makes a few strategic bets that are expected pay off. This means the fund almost always “passes” on companies it evaluates.

When these bets pay off, the returns will stay in Arizona. Right now, the biggest and best software companies raise VC rounds from Silicon Valley funds. When they succeed with a big exit, those dollars go to California, not Arizona. SalesLogix returned $200-$300 million for our VCs after the IPO in 1999. None of those VC returns stayed in Arizona to be reinvested here.

It’s better than investing by myself

I’m not an active angel investor and I’m not trying to be. I have made fewer than ten direct angel investments in the last ten years. I don’t look for and evaluate potential investments. I just want to invest efficiently while participating in the growth and success of the Arizona software industry.

I like this approach better than investing on my own. I can forward potential SaaS investments to Romi and know they will be professionally evaluated. I don’t have to hear hundreds of investment pitches, do my own due diligence, attend investment meetings, handle legal paperwork and keep up with each investment.

The AZFF strategy is already working for me. Romi and the AZFF investment team are investing in many of the promising companies I know well. Now I own a small piece of these companies.

The dollars I used to invest in occasional angel deals I now invest with AZFF. I think the results will be better, without the time and effort required to invest individually or as part of an angel group.

It’s an exciting time to grow a startup in Arizona. I think AZFF will help create more great outcomes for founders and investors.

If you’ve got a promising early-stage software company in Arizona that wants to raise money, or if you’re an investor and this approach appeals to you, contact Romi at the AZFF here