jeaunu innovationtalk
TRANSCRIPT
venture capital + Alaska:
Lessons learned
Joe Morrison, Biz21 Principal
http://biz21.co
I. DISCLOSURE!
Past:
Sole Employee/PM, 49th State Angel Fund (>2.5 years)
Present:
Consultant, Municipality of Anchorage (49SAF)
My Other Consulting Areas:
*Innovation *Strategy *Venture Development
Finally:
A. No Musk Ox, Otters, etc. harmed building 49SAF
B. Opinions solely my own, not the Municipality’s
(Thinkspace)
(Thinkspace)
- Alaska: Sadly, not the Seahawks of venture capital.
+ Neither is (most state names here).
Room for improvement in 45 states.
High
Cost
VCs
Angels
Mid/Varies
Accelerators/Incubators
Crowdfunding Sites
Equipment Loan
Customer Financed
Low Cost
Friends and Family
Grants, Prizes
Founders
II. WHAT IS VENTURE CAPITAL?
Many forms of startup financing exist
That Angel/VC “stuff” at the top:
Also called:
+ “risk capital,” “patient capital”
- “vulture capital”
High
Cost
VCs
Angels
II. WHAT IS VENTURE CAPITAL?
Many forms of startup financing exist
Appropriately costed.
Angels and VCs = Not for every business
Angel/VC Backed Firms Must:
*Show “exit” potential, paying investors back
a multiple, not a percentage
*Most such businesses don’t return principal
*Thus, Angel/VC Backed traits=
High Growth, Scalable
Could be an acquisition target
Notes:
50% margins, $20 million revenue
90% of positive “exits” are M&A
III. WHY VENTURE CAPITAL?
Data varies, points can be debated. My take:
+ Strong economic, social and cultural impact
? Wealth creation
- Poor or average returns as an asset class
And so, what about Alaska?
IV. VENTURE CAPITAL IN ALASKA
Stops, Starts, Attempts throughout Alaska History
My involvement: 49SAF
$13.2M US Treasury Allocation for Anchorage
Largely a “Fund of Fund” Investor
49SAF Partner Funds (Thousands)
49SAF TOT
Anchorage Opportunity $2000 $4000
Alaska Accelerator $ 850 $1700
49th $2000 $4000
Anchorage Equity Partners $4500 $9250
The real victory: 12 managers, >24 private investors
Q: Alaska, what do these companies have in common?
Carr Brothers
Veltri Enterprises
McGee Airways
General Communications Inc.
Alaska Command Federal Credit Union
POP QUIZ!
A: These Alaska grown companies—most built, then
sold—are some of Alaska’s largest employers.*
*2010 Data, Alaska Div. of Labor
#3
#8
#11
#12
#18
POP QUIZ!
TAKEAWAYS/PERSPECTIVES
On an individual venture financing: A) Is “exit” possible?
B) Can this team execute? (people > widgets)
C) How possible is a success vs. suspension of disbelief
On venture development, nationally: Don’t be a “Silicon” Anything, be your Community
In Alaska: Venture is viewed skeptically. It should be.
We remain conservative. But our small steps are significant.
Are there a bunch of startups here? Nope.
It’s Alaska’s choice: Give up, attract them, or build them.
TAKEAWAYS/PERSPECTIVES
Why not us? No good reason. It’s up to us.
PS #GOHAWKS