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The 12 judges on the panel, representing a variety of local financial institutions and funding agencies, heard a total of six presentations from aspiring entrepreneurs. In the end, they picked AlaskaESA's Joy Craig and Paul Dworian as the winners. In second place was Linus Romey's Pacific Seaflight LLC, which would use hi-tech craft which fly just above the waves to offer passenger service in Southeast Alaska. Third-place honors went to Wynne Crisman and Declarative Engineering; he and his partners want to use the Java programming language to build a system which allows customers to more easily develop their own software. The competition was jointly arranged by Wedbush Morgan Securities Regional Manager Allan Johnston and Rick Wolk, instructor of management and entrepreneurship at Alaska Pacific University.
The "ESA" in the company's name refers to a Phase 1 Environmental Site Assessment. As Dworian explained it, under federal law a company which buys a piece of contaminated property is partially liable for its cleanup, even if the new owners never spilled a thing. The only way to avoid the liability is to show that you looked for contamination and didn't find anything. As a result, lenders and potential buyers of commercial property are increasingly demanding a site assessment before completing sales or approving land as collateral, Dworian said. As a manager at URS Corp., a large engineering firm in Anchorage, Dworian said he has performed about 100 ESAs. Dworian said that currently, Phase 1 ESAs cost about $3,500 and take 2-3 weeks to complete. He and Craig, who will bring management expertise to the enterprise, said their company could do the same thing for $2,800, and do it in a week. The partners' business plan predicted they would reach breakeven in less than a year, based on an estimated five inspections per month. The partners said they were prepared to put $25,000 of their money in the project. They were asking for an additional $50,000, to be paid back within four years.
"I think Jim's comment made the whole evening worthwhile," said Johnston. "If they (Craig and Dworian) like the idea, it could mean an awful lot of money to them." Johnston said AlaskaESA won out over Pacific Seaflight because it had the lowest risk and a proven business model. "It didn't have the Ôwow factor' of the airplanes, but it didn't need much capital and was a known enterprise," he said. Pacific Seaflight's Romey would be quick to point out that the vehicles he wants to acquire are marine vessels, even though they look like bat-winged aircraft. But by law, a "wing in ground effect" machine is treated a boat. Developed in Australia, the craft takes off and lands on the ocean and can travel 100 mph over waves up to 12 feet high. Because it flies on a cushion of air between the wing and the surface (the ground effect people feel when a jet plane "floats" just before landing), it uses half the fuel of a traditional airplane. Romey was seeking $500,000 in startup costs for the business, enough to acquire two of the vessels and begin service from Juneau to Haines and Hoonah. He plans to charge 30 percent less than the small airlines already serving those markets. In the first year, he anticipated $1.7 million in revenues and $745,000 in profits. He said he would use that income to finance startup of a hub in Ketchikan the second year; by the third year, a new, larger plane/boat will become available, allowing him to provide service between Ketchikan and Juneau, and expand into other markets such Anchorage to Kenai. Romey was peppered with questions by the judges, not about his business plan, but about the wing in ground effect technology's safety and reliability. He told them the craft will have a pilot and a navigator, whose main mission will be to keep an eye out for potential obstacles such as fishing boats. He said the craft are equipped with sophisticated collision-avoidance systems, as well. Johnston said he gave Pacific Seaflight top marks, but acknowledged it was a more risky proposition than AlaskaESA. The judges told the third-place finisher, Declarative Engineering, that it needed to give away its software for a while to build a corps of satisfied customers who could recommend it to other companies. Otherwise, they said, the company would have a tough time competiting against large established software companies already doing the same thing. The judges heard three other business plans at the event. They were:
The judges for the event were: Ian Charles, Cogent Partners; Krag Johnsen, Denali Commission; McMillan; Ed Lafleur, Northrim Bank; David Hoffman, Alaska Growth Capital; Johnston; Hugh Wade, Alaska First Community Bank; Jim Wamberg, Alaska Manufacturers Association; Bill Inscho, First National Bank Alaska; Terry Smith, KeyBank; Matt Fitzgerald, Wells Fargo Bank; and Dave Moran, Moran Management Consulting. Editor's note: The Journal is a sponsor of the Alaska Business Plan Competition.
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