The story of a Minneapolis brewpub’s genius fundraising idea.
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“Free beer for life.” If you're anything like us, those are the words you've always been waiting to hear. And for 76 people in Minneapolis, it's now a reality—at least at one bar in the south of the city.
A couple years ago, the founders of Northbound Smokehouse & Brewpub had a brilliant idea: To raise the money they needed to open their restaurant and brewery, they would crowdsource investments in exchange for free beer for life—sort of like a Kickstarter for local beer fanatics.
Here’s how it worked: For $1,000, investors would receive free in-house beer for the rest of their lives, or for however long the establishment remains open. It’s that simple. The National Journal reports that for the same investment, participants could alternatively receive 0.1 percent nonvoting equity in the company. A third option allowed contributors to invest $5,000 in exchange for 0.5 percent equity as well as free beer for life. (We like that one best.)
In the final tally, 46 people signed up for the first option, 42 for the second, and 30 for the third. For those of you following along at home, that's a total of $238,000. And wouldn’t you know it? Not only was the fundraising strategy effective, but the pub itself has been enormously successful—so much so that Northbound has inspired a number of other fledgling businesses to follow in its footsteps, including a coffee shop in neighboring St. Paul.
But what about the economics? Is $1,000 a fair asking price for a constant flow of free beer? According to the National Journal, the answer is a resounding yes. Northbound is giving away some 17 beers a day at just 40 cents a beer. That's about $2,482 a year in free brews—hardly a staggering sum.
And then there's the fact that these free-drinking investors are likely to bring friends and family to the pub, and to order non-complimentary food. Selling quality beer can't hurt, either. Northbound brews its own, and reviews from BeerAdvocate.com indicate it's worth stopping by to sample a few.
But let’s take a deeper look at the numbers. Northbound sells its house brews for $5 a pint. That means you'd only need to drink 200 beers at Northbound to recoup the initial $1,000 investment. Now consider the fact that most Americans consume at least four drinks a week. If you enjoy just two Northbound pints a week, you’ll earn your money back in less than two years.
But come on, if there were a bar in your neighborhood where you knew you could always get free beer, you’d probably enjoy a lot more than just two beers a week.
Via: National Journal
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