a tale of two cities: anchorage & pittsburgh

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Joe Morrison, Principal http://biz21.co [email protected] A TALE OF TWO CITIES

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Page 1: A Tale of Two Cities: Anchorage & Pittsburgh

Joe Morrison, Principal

http://biz21.co

[email protected]

A TALE OF TWO CITIES

Page 2: A Tale of Two Cities: Anchorage & Pittsburgh

PAST: Sole Employee/PM, 49th State Angel Fund

PRESENT: Consultant,

• Municipality of Anchorage (49SAF)

• Foraker Group (Rural Capacity Building Initiative)

FOCUS: Innovation, Strategy, Venture Development

OUR TALE BEGINS…

PROLOGUE

Page 3: A Tale of Two Cities: Anchorage & Pittsburgh

PROLOGUE:

A SOIREE

Page 4: A Tale of Two Cities: Anchorage & Pittsburgh

PROLOGUE

Page 5: A Tale of Two Cities: Anchorage & Pittsburgh

BOOK I: PITTSBURGH

“Pittsburgh’s economic decline, already setting in back in the early 1960s, was an outgrowth of its highly specialized heavy industry economy – only Detroit’s was less diverse.” Richard Florida, “Pittsburgh – The Base Case Turns the Corner.”

Page 6: A Tale of Two Cities: Anchorage & Pittsburgh

BOOK I: THE BURGH

PITTSBURGH MANUFACTURING JOBS 1955: 41.8% 1980: 25.3% 2013: 8%

PROBLEM: OVERCONCENTRATION

DEFINED: NATURAL RESOURCES CURSE

“The resource curse occurs as a country begins to focus all of its energies on a single industry…and neglects other major sectors. As a result, the nation becomes overly dependent on the price of commodities, and overall gross domestic product becomes extremely volatile.” - @investopedia

Sources: 1955, 1980: Wikipedia. 2013: BLS. Chart: Economist Chris Briem

Page 7: A Tale of Two Cities: Anchorage & Pittsburgh

BOOK I: THE BURGH

SOLUTIONS?

Action Effect

1. Renaissance I and II (1950s – 1970s): Public/Private Partnership Clears Industrial Effects/Prime Real Estate, Invests in Downtown Core, infrastructure, Transit.

Cleaner air and improved infrastructure encouraged new businesses to come forward. Today much of the downtown skyline investment remains in good condition.

2. Medical School becomes UPMC (1950s): Mellons Donate $50 Million to provide new Medical School at U Pitt.

Today $1 Billion annually of research funds are driven by UPMC and U Pitt combined.

3. Entrepreneurship & Innovation: 1981: Ben Franklin Technology Partners. 2002- Life Sciences Greenhouse.

2014 VC Regional Investment: $338M 2013 VC Regional Investment: $138M

Renaissance & Medical: Mike Madison, U Pitt Law. VC: PWC Money Tree.

Page 8: A Tale of Two Cities: Anchorage & Pittsburgh

BOOK I: THE BURGH

“There might never again be an anchor industry -- not just in Pittsburgh, but anywhere -- that exists as long as steel reigned here. Economic stability in the future requires not just anticipating, but encouraging, continuous change.” Christopher Briem, Regional Economist, U Pitt.

Page 9: A Tale of Two Cities: Anchorage & Pittsburgh

BOOK II: ANCHORAGE

“It’s too early to panic. It’s also a time to be choosing our steps very carefully.” - Bill Popp, AEDC CEO. February 2015, New York Times.

Page 10: A Tale of Two Cities: Anchorage & Pittsburgh

Source: ISER, 2008

BOOK II: ANCHORAGE

THREE LEGGED STOOL

Page 11: A Tale of Two Cities: Anchorage & Pittsburgh

BOOK II: ANCHORAGE

Strengths(?): The AK LNG GigaProject ($50B). ANCSAs. AKPFC. Arctic Policy. Climate Change. Size of Alaska’s economy. Quality of Life.

TASKS

1. Goal Identification / Economic Planning

Targeted diversification of the Alaska economy with sector growth should occur.

2. Lever Core Energy Industry A. Welcome New Oil, Gas and Extractive Projects B. Identify and Spinoff Technologies and Resources

3. Commercialize University Tech A free market focus on wealth creation from technology created at universities is an area where Alaska can shine- given investment and patience.

4. Support Alaska Businesses “You can’t get there from here” is a false assumption based on forty years of an overconcentrated economy. Corporate taxation, regulations and cultural interactions need to be as business friendly as possible.

5. Help Alaskans Invest in Alaska Money, and more: Identify what kind of Alaska you want in 30 years, and work toward it.

Page 12: A Tale of Two Cities: Anchorage & Pittsburgh

TAKEAWAYS/PERSPECTIVES

Alaskans, investing in Alaska.

EPILOGUE

Page 13: A Tale of Two Cities: Anchorage & Pittsburgh

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 14: A Tale of Two Cities: Anchorage & Pittsburgh

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 15: A Tale of Two Cities: Anchorage & Pittsburgh

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!