Many U.S. cities these days are dotted with microbreweries vying for attention. But for residents of Sitka, a tiny Alaskan city nestled below Baranof Island’s glacier-carved mountains and accessible only by boat or plane, their lone microbrewery is a vital part of the community.
Baranof Island Brewing Co. was founded in 2010 by Rick Armstrong, who started brewing half barrels out of his Sitka garage. Both the brewery and the island take their name from Alexander Baranof, who governed Russian Alaska from Sitka in the early 1800s, before it was sold to America.
Armstrong brews his beer with Sitka’s glacial-fed waters and local ingredients like spruce tips gathered every spring by residents. The brewery’s spent grains are made available to locals for compost, and each Wednesday, it devotes a portion of taproom sales to a different local cause.
So it’s not surprising that when he needed to raise funding to expand the business, Armstrong reached out to the community. Baranof Island Brewing is the first business to raise money under the Innovating Alaska Act, Alaska’s intrastate crowdfunding law. It allows Alaskan businesses to raise up to $1 million from state residents, who may each invest anywhere from $100 to $10,000 in a local business.
“It’s Alaskans investing in Alaska,” says Armstrong.
Alaska is one of more than 36 states that have passed such laws. As in many states, many states, Alaska’s crowdfunding law, passed in 2016, got off to a slow start. And, with a population of just 750,000, Alaska has a small crowd to work with. But Alaskan officials see it as a valuable tool for financing homegrown businesses and helping to diversify the state’s economy from oil.
It’s particularly helpful for the state’s rural areas, where “capital options might be limited, but community ties are strong,” says Penny Gage, business development officer with Alaska’s Department of Commerce, Community and Economic Development.
Alaskan officials have recently stepped up efforts to raise awareness about the new fundraising tool, holding capital-raising workshops and creating a video about the crowdfunding law that is posted on Alaska Governor Bill Walker’s web site.
Armstrong himself was not aware of the law until his lawyer mentioned it. But the Innovating Alaska Act seems tailor made for a business like his. Baranof Island Brewing’s beers are sold locally through its taproom as well as Sitka stores and restaurants. It’s also available throughout the state, as far away as Nome.
The brewery has made inroads in the important market of Seattle and has demand from big box stores and the cruises ships that ply the Alaskan waters each summer, but it needs new equipment to be able to increase its production from the current 2,000 barrels a year.
Baranof Island Brewing’s investment campaign so far has attracted 128 investors. “Folks from Nome all the way down to Ketchikan, all over the state, have become partners with us, they’re now investors in our business,” says Armstrong.
The Alaskan law does not require a crowdfunding portal, so the campaign is hosted directly on the brewery’s web site. However, that may change: there is interest among some entrepreneurial minded Alaskans in creating a statewide portal.
Photo at top: marc.cappelletti, flickr.