Angel Funding Tries To Strike Gold In The Last Frontier
Here’s some shiny news from the land of the midnight sun. $13.2 million worth of angel funding recently infused the Municipality of Anchorage, Alaska, with some economic vitamin D. The money comes from the U.S. Department of Treasury’s State Small Business Credit Initiative (SSBCI), and has been used to create the 49th State Angel Fund. Anchorage is the first U.S. city to receive the allocation.
According to Anchorage Mayor Dan Sullivan, “The goal of the 49 SAF is to make strategic investments to promote entrepreneurship, foster innovation, provide capital and create jobs in our community.” Tightening credit markets have made traditional financing more difficult for startups, just when the economy most needs the innovations of entrepreneurs and their job creating ideas.
Forget what the Simpsons might have led you to believe. Alaska is not the state where you’re paid to live, and the money for the 49 SAF is no giveaway. Local companies that offer the promise of “high growth” or demonstrate a “significant economic benefit” may apply for a share of the funds. The 49 SAF will invest anywhere between $30,000 and $3 million in a business venture. Awarding of angel funds will be determined by a business evaluation based on these qualities among others:
- Business strategy
- Market analysis
- Job creation
- Financial plan
The health of local economies depends upon more than a few successful individuals or companies. Sustained growth and well-being require communities coming together to foster a culture of innovation and investment.
The 49th State Angel Fund, by bridging funding shortfalls, hopes to improve the chances of survival for promising young companies. Perhaps the economic stimulus will welcome new investors as well as encourage entrepreneurs to introduce their dreams.
Nine local business and economic leaders were appointed by the mayor to serve as members of the 49th State Angel Fund Advisory Committee. In addition to advising on business applications, the committee will examine potential investments from Anchorage-focused angel funds. The great hope is to attract new capital to Anchorage and expand the investment network.
Private financing will determine the success of the project. The 49th SAF needs to generate $132 million in new investments over five years in order to meet a “10 times leverage” goal set by the federal treasury.
There’s good reason to root for startup initiatives like the 49th SAF. According to the U.S. Department of Labor, small business accounted for nearly 65% of new jobs created over the last 17 years in Alaska. Diversifying and growing local economies takes community action and small business ingenuity.
Similar angel funding incentives have helped spur economies elsewhere. The Jumpstart effort in Northeast Ohio is a model of success. Founded in 2003, the non-profit venture development organization has since helped establish 17 investment funds, generated over a billion dollars in financing, while creating more than 4,425 new jobs.
Let’s hope the success of the 49th SAF shows us the way to more king crab and salmon for everyone.