Alaska Native investment in small business
The quality of Heather’s Choice products, such as the blueberry/almond Packaroons, was fundamental to The Eyak Corporation’s interest in investing.
In Spring 2018, The Eyak Corporation turned its eyes to Alaska for investment opportunities, landing on the popular local company Heather’s Choice. Though about 95 percent of the village corporation’s revenue—and investment—come from out of state, the in-state equity purchase was slated as being mutually beneficial both to the corporation and the local business.
“We’re looking for companies that have a strong, local presence—looking for companies that have strong owners that are committed. And, the other thing that we really like in a company is that it can capitalize on Alaska’s essence,” explains Rod Worl, CEO of The Eyak Corporation. “And Heather’s Choice was a very good example of a company that could capitalize on Alaska’s essence but also had the potential for a large upsize in a large market. So that played an important factor in choosing to invest in it.”
Alaska Native corporations, from the twelve regional giants to the approximately 225 village corporations (which run the gamut in terms of size), play an important role in the Last Frontier’s economy.
“Native corporations are the largest private landowners in Alaska, with title to 44 million acres of selected land throughout the state,” explains the Resource Development Council’s website. “Development of the resources beneath their lands offers Native corporations an opportunity to generate jobs and other economic benefits for their Native shareholders and fulfill the implicit promise Congress made to Alaska Natives in exchange for extinguishment of their aboriginal claims.”
Because the extent of their land ownership is well known and many Alaska Native corporations did pursue natural resource projects in their early years, many people only associate Native corporations with resource extraction projects and investments; however, most have far more diversified investment portfolios, with many teaming up with local businesses to help them fulfill their mission.
The Eyak Corporation’s mission is straightforward: “To return financial benefits to present and future shareholders through the development of economic opportunities and growth of our assets while protecting the ownership of our ANCSA lands and Native cultural heritage.”
This has mostly been done through government contract work, much of it outside of Alaska, though Worl is clearly excited to be investing closer to home with Heather’s Choice.
“It’s always been the intent of our board and management to become more involved locally with our community,” Worl says.
“We feel that by becoming more locally involved we can have more say in our own community because, when you start doing things at home, people start to notice who you are as a corporation.
“We’re a fairly large company for a village corporation, but we don’t get as much recognition in Alaska because most of our businesses are Outside.”
The Eyak Corporation, which has approximately 550 shareholders, garnered about $44 million in revenue in 2017 and expects close to $40 million in revenue for 2018.
“By making good investments at home, you enhance your reputation, and it definitely opens up doors, which really aligns with our mission and vision,” Worl says.
“And, it has the potential to create employment for our shareholders—that was another factor. When we introduced Heather’s Choice to shareholders, they were very positive about it to us. They just liked the idea behind dehydrated foods, promoting dehydrated foods—it’s a very Alaskan thing.”
“We’re looking for companies that have a strong, local presence—looking for companies that have strong owners that are committed. And, the other thing that we really like in a company is that it can capitalize on Alaska’s essence.”
Heather’s Choice is a dehydrated backpacking food company based out of Anchorage that focuses on creating healthy, high-quality backcountry meals from Alaska-sourced foods.
“I started the business because I saw there was an opportunity to get high-quality food into people’s packs,” says Heather Kelly, founder of Heather’s Choice. “At the time I started, the majority of backpacking food companies out there were selling freeze-dried food. I knew I wanted to sell dehydrated food that packed down smaller and had less preservatives, better ingredients. And we could control and produce very high-quality products. For example, we have sockeye chowder made with wild Alaskan sockeye.”
Worl was introduced to Heather’s Choice when Kelly went searching for investment via Anchorage Equity Partners. This wasn’t the first time Heather’s Choice was on the trails to secure investment to scale up the business. A successful Kickstarter campaign raised enough funds to design and print new custom packaging and purchase a commercial dehydrator in 2015.
In April of 2016, Heather’s Choice was invited to join the Launch Alaska Accelerator Program, a group of local investors dedicated to helping Alaska startups become scalable businesses with financial investments and mentorship, according to a news release.
“After completing the Launch Alaska program, Heather’s Choice was approached by the Alaska Accelerator Fund. Their investment allowed Heather’s Choice to hire several new staff members, open a retail location in Anchorage, and obtain office space and warehouse space for inventory and shipping. A recent grant from the Alaska Seed Fund is also helping Heather’s Choice expand their product line to include more backcountry snacks,” the release states.
“Anchorage Equity Partners aims to help young businesses and startups scale. They are the ones who connected us with Rod and Brennan [Cain] and The Eyak Corporation,” Kelly explains.
Heather’s Choice, through its products, marketing, and location, speaks to an Alaskan audience, making it a good fit for a partnership with The Eyak Corporation.
Worl makes it clear that The Eyak Corporation doesn’t see investment as a one-way street, where only the corporation benefits. “I think it’s best if both parties can come together to create synergy. We thought that Eyak could help, obviously, by providing capital, which is needed by the company, but also by offering our management expertise and connections we have with Alaska, as well as our existing business,” Worl says.
“And, to top it off, our expertise and our forte is really in government contracting. We thought that we could leverage our experience and our contacts and customers in government contracting to bring those sorts of opportunities to Heather’s Choice,” he says, noting that one large government contract could change a company’s financial situation overnight.
There were many attractive elements to the investment for The Eyak Corporation beyond Heather’s Choice experiencing more than 500 percent growth in 2016. Kelly’s strong management and commitment as a small business owner was a serious selling point for The Eyak Corporation, Worl says.
Another was the chance to add a little diversity to The Eyak Corporation’s portfolio, though the investment in Heather’s Choice represents less than 1 percent of its total assets.
“We don’t want to be totally dependent on government contracting,” Worl says. “But if we’re going to diversify, we just feel that we’re going to find opportunities in Alaska. With our parent company based in Anchorage, it’s easier for us to look at these particular investments and look at them closely for potential upsides and also downsides.”
Kelly has already started putting The Eyak Corporation’s investment to good use.
“Their investment helped us to scale at an opportune time,” Kelly says. “Heather’s Choice has continued to grow. We’ve been able to use the funding to build out our production kitchen here in Anchorage, which is now fully operational and permitted.”
The funding also allowed Heather’s Choice to get in front of REI Senior Vice President Susan Viscon at the Outdoor Retailer Show (a business-to-business outdoor sports show in Colorado) this past summer.
Apparently impressed with what was presented, Viscon gave the green light to introduce Heather’s Choice at twenty-five REI stores in 2019.
Worl agrees with Viscon’s assessment of Heather’s Choice products.
“In order for this company to be a big success, you really have to start with a quality product,” Worl says. “We sampled the products here, and we thought it was exceptional, especially their Packaroons. We knew that they had a good package.”
More Than Money
For Kelly, teaming up with The Eyak Corporation was about more than just the money.
“A big part of it was the people. With Rod being a very well-respected CEO, as well as Brennan as legal counsel—it was very attractive,” Kelly says.
Brennan Cain is the vice president and general counsel for The Eyak Corporation, a position he has held since 2012.
“Additionally, they had areas of expertise, such as opportunities for government contracting down the road,” Kelly says. “That would be a dream scenario for us… Right now, we wouldn’t necessarily be able to keep up with a major government contract. So, that’s where there’s a lot of groundwork for us to do with increasing capacity, becoming more efficient, and still maintaining the quality. Servicing a major retailer like REI, and getting our products in all 150 stores, that will really show us what it would take to get some sort of government contract.”
Most likely, Kelly will have time to get Heather’s Choice situated before any government contracts come in—even with The Eyak Corporation’s experience and expertise.
“It could take a while,” Worl says. “The nature of government contracting is really a long-term play because even if a contractor or officer or client in the government wants to have your service, it could take anywhere from a year or two or three for it to come through. We’re hoping something will happen in 2020.”
It is a long-term play, but Kelly is confident that by partnering with The Eyak Corporation, she’ll have effective guides to navigate landing a government contract. Kelly points out that partnering with an Alaska Native corporation provides opportunities for a local business owner, such as herself, that wouldn’t be available through other investors.
“There’s a lot to be said for partnering with an Alaska Native corporation, and I don’t think we’ve cracked that open yet, to be honest,” Kelly says. “I don’t think we’ve leveraged them to the fullest extent. I think they have different resources or connections or opportunities that we haven’t fully tapped into. Once we’re able to scale our business a bit more and have more production capacity, they’re going to have a lot more opportunities for us to take advantage of.”
Kelly also notes that The Eyak Corporation’s investment in a local business has a trickle down effect that helps both businesses achieve their goals of making Alaska stronger.
“We currently employ eight people in Anchorage. So we create great jobs, and we’ll obviously create more jobs as we grow. Additionally, by having someone like The Eyak Corporation, they help us in our mission of strengthening the Alaska food system. By doing business in Alaska, we’re buying more local food. We’re buying salmon, we’re buying grass-fed beef, we’re buying grass-fed bison,” Kelly says. “We’re helping to create jobs even outside our business, and so I think really by Alaska Native corporations investing in Alaska businesses, especially manufacturing, that it’s pretty darn powerful.”
In This Issue
Spreading the Word
When Bristol Bay Native Corporation (BBNC) first aired TV commercials featuring the tagline, “A Place That’s Always Been,” the reaction was surprising. Not only because they received numerous accolades and marketing awards for the campaign but because, at the time, it was rare for Alaska Native corporations to market themselves through the media.