How a Co-Op Brewery like Fair State Raises Funds

In the heyday of using Kickstarter to get a brewery off the ground, Evan Sallee and friends Niko Tonks and Matt Hauck saw that making their Minnesota brewery, Fair State, a co-op brewery as a more attractive option.

“We really wanted to find a way to be a community-supported brewery and really make sure that what we’re giving back to our community and how it incorporates the people was proportionate to what they’re investing in us,” he explained. Starting with 250 members in 2014, the brewery now has nearly 2,000 members that have each bought lifetime memberships for $200 each. Of those members living in Minnesota, the brewery launched a campaign in March with a preferred share offering where current members can buy shares into the company for a fixed rate return at $500 per share.

“Instead of buying a share in a business, and maybe it’s going to go way down, or it’s gonna go way up, we’re offering a fixed rate of return over a period of time,” Sallee said. “It’s an extremely common vehicle among co-ops for funding their operations and expansion.”

Nearly 100 members have rebought into this to help fund the ordeal to a total of more than $200,000 so far, which includes converting an adjacent garage to the brewery into more seating and help invest back into the brewery as well.

“[They’re] not going to make like a 10x return on this, but we tell them if you support us then we will give you a fair and honest return and get your money back,” Sallee said.

With his background in law, Sallee helped set up the legal paperwork, which is available to anyone to see on the brewery’s website along with working with outside counsel to develop the necessary work.

“It’s reasonably involved but it also it’s not crazy complicated,” Sallee said. “By law, our members have the ability to request financials and so we can make that available to them in person.”

While the investment was developed to help in growth of the brand, which is now available across 10 states and overseas, Sallee said because of the pandemic, it has altered the thought process a tad. The expansion can help add more consumers on-site while helping the brewery become more financially solvent as well.

Even during the pandemic, the brewery has added distribution to Texas along with Connecticut, Rhode Island and New Jersey while adding Detroit and Ann Arbor, Michigan as well.

“[Growth is] still happening,” he said, “we just have to kind of pivot or reimagine what we want those to look like or how we think about them.”

Concept art courtesy Fair State Brewing Cooperative

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