First, thanks to Allan for inviting me to join this blog and also for supporting my current Alaska-related activities.
Having had the opportunity to spend some significant time in Alaska since last January, I've met a number of tech companies as well as consultants and assistance providers. One thing is certainly true. Alaska has no shortage of smart people who love the state and want to help it prosper.
I have had the good fortune to work in two states that have economic landscapes similar in many ways to Alaska. They are Montana and New Mexico. Specifically, these states are relatively large, sparsely populated, and have historically had economies dominated by natural resources exploitation. Tourism has more recently emerged as a focus for economic development.
In both Montana and New Mexico, there is a drive to diversify and grow their economies by supporting techn0logy-driven economic development. There have been modest successes in both states. Here are some of my observations.
Tech-driven economic development requires technology, capital and people, as we all know.
Both Montana and New Mexico have struggled to attract venture capital. New Mexico has achieved some success by implementing a state program which will invest into funds that set up an office in NM. There are now 7 or 8 VC firms in NM, and all have made investments in NM. To my knowledge, Montana still does not have a fund. If you are interested, I can provide you with more information about the NM program.
Both Montana and NM are technology rich. Montana State University in Bozeman is an active partner in tech transfer and economic development, and has a strong research base. In my opinion, Bozeman is the center for high tech in Montana. Right Now Technologies raised venture capital from outside the state, just went public, and will likely produce spinoffs.
NM has several strong universities, including the U of NM in Albuquerque. UNM also is an active partner, if not leader, in economic development and has a strong research base including a medical center. Of course, NM also has Los Alamos and Sandia national laboratories, both of which do more than a billion dollars in research a year. A number of companies have raised venture capital and have gone public in NM. In one case, local investors backed a seasoned entrepreneur with only a fuzzy business plan because they believed in the person.
Having said all that, raising venture capital in MT and NM is still difficult. Even the funds in NM are pretty much just Series A guys. Funds outside the state are looked to for follow-on rounds. But funds outside have enough deal flow that they don't need to travel to MT and NM for deals. There is a history of companies being formed in Montana and NM and then being forced to leave. It seems to me that Alaska faces the same problem.
However, in the cases of MT and NM, in my view the most critical limiting resource is still people. Not just smart people with good ideas, but people that investors are willing to back. Although one can point to a lack of capital in Alaska, my feeling is that investment is always available to fund good deals. Admittedly, the deal may spawn in Alaska and then be forced to leave to get funded, but if enough deals are spawned, some will stick. Then one or two big successes will help to build critical mass. Its a long term program.
In sum, I see Alaska having two primary liabilities. The first is a limited number of entrepreneurs whom investors view as "fundable". The second is, with respect to tech-driven business, the location of your primary research university and perhaps its weak connection with your efforts. In any case, small tech companies usually need, or at least can benefit from, access to and the support of the local research university and since most of these are in the Anchorage area, UAF is not easily accessible. Moreover, in both Montana and NM, ideas generated within the universities are the seeds of new start-ups.
Secondary issues, I believe, are the lack of venture capital and Alaska's distance from the lower 48.
Ken Dozier's idea to mine the business schools is a good one. Montana State U is doing some of that. Los Alamos National Lab is also recruiting from top biz schools. Obviously, the more seasoned biz school graduate may be more successful in attracting investment.
Thanks for giving me the opportunity to share my thoughts and I hope to have an opportunity to continue to stay connected with and to support your efforts.
Best wishes,
Peter Perna
ALPINE STRATEGY GROUP, LLC
P.O. Box 4950
Boulder, CO 80306
ph/fax: 970-259-9276
mobile: 505-250-9337
www.alpinestrategy.com
