Alaska Dispatch

Alaska might be best in the U.S. in a lot of categories, but entrepreneurship is apparently not one of them.

Starting a new business takes money, and according to a 2008 Milken Institute study, Alaska is the worst state in the country in which to raise capital. That problem will be addressed at "Showcasing Solutions: Strengthening Alaska's Entrepreneurship and Innovation," a conference that starts later this week in Anchorage.

The idea for the conference was sparked when Craig Nolte, regional manager at the Federal Reserve Bank of San Francisco, posted an offer to host a conference on the LinkedIn page of Allan Johnston, one of the conference's main organizers and a longtime securities firm manager who now focuses on sustainable economic development. Nolte will travel to Anchorage to take part in the inaugural conference. Sponsored by the Institute of the North and held at the downtown Anchorage Marriott, "Showcasing Solutions" will focus on Alaska's challenges and hash out solutions to encourage entrepreneurs.

The Milken Institute, an economic think tank founded by junk-bond king Michael Milken, released its State Technology and Science Index study in June 2008. According to the Milken Institute, the study "ranks the 50 states in terms of their technology and science assets, and their ability to leverage those resources to achieve economic growth." The study looked at factors like the amount of venture capital and federal funds that are pumped into new businesses, and found Alaska to be sorely lacking.

Alaska ranked 44th overall, and dead last in the category of "risk capital and entrepreneurial infrastructure."

The main problems with entrepreneurship in Alaska are the lack of financial infrastructure that would allow entrepreneurs to raise capital and a local mentality that doesn't see entrepreneurial risk-taking as a reasonable option, according to Johnston.

Alaska is one of two states that don't have a formal "angel network" of investors who want to fund local entrepreneurs, Johnston said, and one of only five that doesn't have a single Small Business Administration-licensed small business investment company.

Oil and gas have been great for Alaska's economy, Johnston said, but the world is moving towards a knowledge-based economy. He brought up Dutch Harbor fish oil as an example of the kind of progress he'd like to see take place. It's already being sold for $5 a gallon and burned as fuel, he said, but what about using that oil in food supplement pills so that you can sell it for $1,000 a gallon?

"There are hundreds and hundreds of opportunities like that out there," Johnston said. "You just have to get people to dream and to execute."

There's a distinction between entrepreneurship and starting your own business. Alaska is still a state where a guy with a backhoe or a parking-lot painter can write his own ticket. The difference is that an entrepreneur has a new way of doing something, and they think their idea will work on a large scale, said Carol Horwith, a vice president for Chicago-based Scott Balice Strategies, which has an office in Anchorage.

Horwith is working to organize an investment firm that would be based in Anchorage and invest in primarily Alaskan companies.

The problem in Alaska, Horwith said, is that the financial system is focused on debt rather than equity. So while an entrepreneur might be able to mortgage his house in order to raise capital, he likely won't be able to find investors who will take a bet on him in exchange for a slice of the possible payoff.

"If nobody buys into the solution, it's much more expensive and they're not sustainable," Johnston said. "You need to grow strong local stakeholders that want to become leaders of change and not wait for others to do things for them."

Contact Joshua Saul at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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