jeaunu innovationtalk

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venture capital + Alaska: Lessons learned Joe Morrison, Biz21 Principal http://biz21.co [email protected]

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Page 1: Jeaunu innovationtalk

venture capital + Alaska:

Lessons learned

Joe Morrison, Biz21 Principal

http://biz21.co

[email protected]

Page 2: Jeaunu innovationtalk

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

Page 3: Jeaunu innovationtalk

(Thinkspace)

Page 4: Jeaunu innovationtalk

(Thinkspace)

- Alaska: Sadly, not the Seahawks of venture capital.

+ Neither is (most state names here).

Room for improvement in 45 states.

Page 5: Jeaunu innovationtalk

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”

Page 6: Jeaunu innovationtalk

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

Page 7: Jeaunu innovationtalk

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?

Page 8: Jeaunu innovationtalk

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

Page 9: Jeaunu innovationtalk

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!

Page 10: Jeaunu innovationtalk

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!

Page 11: Jeaunu innovationtalk

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.

Page 12: Jeaunu innovationtalk

TAKEAWAYS/PERSPECTIVES

Why not us? No good reason. It’s up to us.

PS #GOHAWKS