Startup community brainstorms to save a nonprofit ‘vertical’ farm in Midtown Anchorage

Managers of an Anchorage hydroponic farm at risk of shutting down in March made an unusual move to save their operation.

Seeds of Change, near Arctic Boulevard and 26th Avenue, occupies a 10,000-square-foot warehouse designed for high-tech agriculture. During its first year of operation, it served 18 young employees through a program for at-risk youth at the Anchorage Community Mental Health Service.

They've sold their first produce at farmers markets and to local restaurants: a dozen varieties of lettuce, chives, mint, kale and bok choy.

"Our program has not generated enough revenue to be self-supporting," said Ryan Witten, the community development manager at Seeds of Change. "We were told we have funding through the end of March, by the ACMHS board.

Unless we have a plan for the future, they would be forced to shut down. That is absolutely not what the board wants to do."

[How an indoor farm in Midtown Anchorage could help at-risk youth]

They reached out to the University of Alaska Business Enterprise Institute for ideas on saving Seeds of Change.

That led to calling on Nigel Sharp, the University of Alaska Anchorage Global Entrepreneur in Residence.

Sharp, the university's first GEIR and one of only a handful in the nation, has held startup weekends, technology sprints and other events to guide tech-savvy startups since arriving in Alaska last June. But this was the first chance to put together a think tank of expertise moving from theory to a hands-on rescue of a distressed business.

Sharp got the pieces in motion to launch the first Growspace Social Business Catalyzer event Feb. 16 that began at the Seeds of Change warehouse. He invited the entrepreneurship community, including BEI staff, Alyse Daunis of Launch Alaska and Rachel Miller, Alaska Pacific University's School of Business' Walter Hickel Endowed Professor.

Eight youth from Seeds of Change also attended, as did officials from ACMHS.

"The project is short on both time and money and yet serves an incredibly important mission for our community," Sharp wrote in his invitation. "Join us for the Growspace program where we'll deep dive into developing new sustainable business models which will end with a presentation to their board of directors for implementation."

A "catalyzer" works with participating organizations that includes social enterprises and nonprofits, to rapidly develop business models, customer validation and funding source strategies.

About 32 professionals turned out for the 10-hour catalyzer at the Anchorage Communications Center the morning of Feb. 17. Sharp said he started from a list of about 160 entrepreneurial resource people. The kickoff event the day before brought out about 100 of them, he said.

The main goal was to come up with a transition plan to present to the board by the end of March. Then the board will make a decision about whether to proceed or shut down, Sharp said.

"We came up with three major elements: fundraising, functioning as an educational business model and outsourcing Seeds of Change staff and facilities to partner organizations," Sharp said. "A fourth element is to do agricultural tourism. It's a novel opportunity to visit an indoor hydroponic farm."

The managers of Seeds of Change, Witten and Sundance Visser, were energized by the ideas.

"We split into six work groups," Witten said. "First we did team building, then talked about challenges with the existing structure. We looked at other organizations that do social impact work working with youth. We all did work ahead of time, researching. Then we came up with ideas in the work groups."

The four action plan ideas they ended up with are all credible, workable ideas that link well together, Witten said.

The first one focuses on fundraising and marketing.

"A lot of people still don't know about Seeds of Change. Since the community is still becoming aware of it, it's important to raise awareness and do fundraising, to give a longer runway on training and education programs for more youth," Witten said.

The plan calls for providing educational tours and classes on how to grow year-round indoors.

"It's a pretty new thing to do. If we can help other people shorten their learning curve, that's a good opportunity for us," Witten said.

A second plan involves opportunities for leasing space. Far North Fungi, a mushroom growing business, is looking for more space and showed up at the meeting.

"They need a place that gives more heat for the mushrooms to grow and we need more CO2 for our plants, which the mushrooms give off," Witten said. "In the coming weeks, we will be talking about leasing space."

A third idea is to develop tourism opportunities inside Seeds of Change.

A fourth idea is to sublease with a partner business such as a software developer who can create farm-planning software. They can also partner with other growers for food distribution from the location.

Seeds of Change features 1,500 growing "towers," vertical columns containing thousands of plants. Though the first seeds were planted before Christmas in 2016, the dream dates back a decade of planning by Dr. Michael Sobocinski, the chief operating officer of ACMHS.

Seeds is part of the ACMHS Transition Age Youth Continuum of Services. Staff are 16 to 26 years old, and generally are coming out of foster care, mental health treatment, the juvenile justice system or were formerly homeless or Alaska Youth Advocates who use the space as a healthy drop-in center. Sobocinski's dream was to give them a transition point or seeds for changing their own lives through the nurturing environment of planting.

ACMHS bought the building in 2014 and renovated it at a cost of about $2.9 million, including the purchase of equipment from the Alaska Department of Health and Social Services from the "Bring the Kids Home Fund," said Jessica Cochran, the executive coordinator at ANCMS. An Alaska Mental Health Trust grant paid for the staffing and startup.

Seeds of Change's growing operation is energy efficient thanks to the investment in the latest technology: low energy usage even with dozens of grow lights, maximum use of space due to the vertical towers and an irrigation system that recirculates water. Even soil costs are reduced since the plants grow in a "beds" made of recycled-plastic wicking material.

The goal is to produce 70 tons of produce per year. But the expense of operating the business has far exceeded any profits, Witten said.

"There's been a shift in the way that nonprofits have operated in the past. We have been doing our best and we recognize we need more support, working with Nigel Sharp and the UAA Business Enterprise Institute," Witten added. "I was really impressed at the caliber of people in the room. It was tens of thousands of dollars donated in time to us, especially over the last weekend."

Sharp said social-impact businesses — enterprises that combine a social cause in either a for-profit or nonprofit structure — are becoming a new vehicle for philanthropy in the U.S. They also represent a $310 billion US industry sector that is expected to grow to $500 billion over the next 10 years.

"This represents a huge opportunity for building impactful businesses," Sharp said. The consequence is that more resources will be shared among entrepreneurs to create working business models.