[LINK] "Would You Pay $1,000 Once to Get Free Beer for Life?"

[rfmcdonald]

Michael on Facebook shared this National Journal article by Matt Vasilogambros describing an unusual sort of crowdsourcing finance for a new restaurant. The technique described is something that can be applied more generally than a single bar in a single city; it could be generalized much more broadly, I think.

There is a price tag for unlimited beer for the rest of your life. It's $1,000.

In reality, the cost for that much beer is a lot more. But for a few dozen people, free beer for life is their reward for investing in a small restaurant called Northbound Smokehouse & Brewpub in a quiet southern corner of Minneapolis.

Amy Johnson and her two business partners needed to raise $220,000 to secure a bank loan and fulfill their dream of opening a restaurant that served beer brewed right there at the pub. They went to investors who offered to give heavily for a voting share in the restaurant. But since the potential investors had no experience in the restaurant industry, the owners backed away.

And then came the idea from some friends and family who wanted to help out. "They were, like, 'I've got a few grand, but I don't have too much money,' " Johnson recalls. "And people kept saying this over and over, and we latched onto the idea. Why not just take a couple grand from everybody and then we'd have all the money we'd need?"

So, that's what they did. People who invested $1,000 receive free in-house beer for the rest of their lives, or as long as the place stays open. People could also receive 0.1 percent nonvoting equity in the company for every $1,000 invested. Or for $5,000, investors get 0.5 percent equity and free in-house beer for life. The brewpub, now a registered LLC, hit its goal of $220,000 through the 46 people who chose the first option, 42 who picked the second, and 30 who took the third, all finding out about the opportunity by word of mouth.

Northbound has now been open for almost two years and is thriving. The investors didn't drink them dry. The restaurant is giving away some 17 beers a day, and the cost is low, at just 40 cents a beer. Plus, investors aren't just going to the brewpub for a beer by themselves—they order food, bring people, or maybe order a scotch after dinner. For the investors, it's also about the sense of ownership. Or, as Johnson explains, "We have an army of over 100 people who are our cheerleaders."