Lack of available investment capital for business development in today’s economy is not a problem. This is most clearly evidenced by the tremendous level of recent capitalization in the US stock markets. However, just as the State of Alaska’s large investment funds have sought to diversify their portfolios through investments in companies located in the Lower 48 and in other countries, so too have successful regional and village native corporations chosen to diversify their portfolios. These important sources of investment capital follow the same economic decision process most investors follow, which is to seek investment opportunities which promise the highest economic return within an acceptable level of risk.

Unfortunately, many economic development projects in rural Alaska do not present themselves as attractive investment opportunities either due to a relatively low expected return on investment or due to an unacceptably high level of risk. Three factors generally contribute to low expected return and high risk; high cost of entry, distance and small markets.

However, there are other notable business enterprises in rural Alaska that have achieved considerable success. Large projects like the Red Dog mine have been successful because they serve world markets utilizing a vast, rich ore deposit, and the project is of sufficient size to support required infrastructure development. The Western Alaska Village Enterprise (WAVE) has also been successful because it has leveraged the buying power of several rural communities (markets) to achieve the economies of scale necessary to make the business efficient and profitable. We have also become aware of other smaller business enterprises in rural Alaska that have successfully targeted small markets by carefully matching costs to potential revenues.

Rural projects that correctly target market opportunities in Bush communities, in businesses that require relatively low cost of entry and which take advantage of efficiencies presented by technological advances appear to have the best chance to secure available investment capital.