Under new law, Broken Clock Brewing looks to locals in opening brewery
Thanks to a new law, a group of homebrewers is tapping locals to become investors in its brewery in Northeast Minneapolis.
The group, Broken Clock Brewing, will be one of just a few cooperative brewing companies in the state — and the second in Northeast Minneapolis after Fair State Brewing Cooperative — when it opens this spring. Along with several other small, up-and-coming brewers, Broken Clock co-founders Jeremy Mathison and Jeremy Gharineh are taking advantage of a new law dubbed MNvest to finance the venture with the help of Minnesota residents.
“It’s a perfect relationship because you’re really leveraging a community of people that can now invest in a company that, before, never had the ability to,” Mathison said. “So you can invest anywhere from $500 to $10,000 in a business that is a part of your community, whereas in the past you could never do that.”
The MNvest law, which took effect just last spring, permits businesses in the state of Minnesota to advertise investment opportunities to residents through registered websites. The websites, or portals, act like crowdfunding websites such as Kickstarter, but instead of perks or rewards for backers, the public buys equity or debt in a company. While federal roadblocks to investment crowdfunding have been lifted, delays have driven a vast majority of states to pass similar laws.
Breweries have been the leading businesses in taking advantage of MNvest. Zachary Robins, an attorney who helped write the law and the director and co-founder of a nonprofit that supports it, said breweries, along with wineries and similar liquor producers, are ideal businesses to crowdfund investments because they foster community in their neighborhoods — plus the industry is quickly growing.
“Breweries are one of the best businesses to spread the gospel of investment crowdfunding. These breweries are all setting up taprooms, which people can go to and frequent, so I think there’s something to be said how important these breweries can be for the community,” Robins said.
While the Minnesota Department of Commerce currently lists only five businesses as MNvest issuers, two of the entities are cooperatives, including Broken Clock. Not only has the brewery attracted co-op members, it has also tried traditional crowdfunding, raising $8,000 via the crowdsourcing platform Indiegogo.
“A cooperative can lend itself to investment crowdfunding because it’s naturally set up as a business that will be owned by the community,” Robins said.
The fact that Broken Clock is also a co-op means that Broken Clock’s members — “everyday, hardworking” people, Mathison said — can put money toward a business they already have a vested interest in. A majority of backers and the brewery’s 130 members have come from neighborhoods in Northeast Minneapolis and neighboring cities like St. Anthony, Columbia Heights and Coon Rapids. Members, several of which are also investors through MNvest, get access to the brewery’s board meetings, discounts on beer and dividends once Broken Clock is profitable.
“It’s chance for them to have a place that they can call their own. Now this gives them a chance to really get ahead financially,” Mathison said.
The people behind Broken Clock are no strangers to Northeast Minneapolis. Head brewers Will Hubbard and Mike Johnson, both seasoned homebrewers, already have months of experience brewing in their space in the Marshall Terrace neighborhood with equipment they purchased from the space’s least tenant, 56 Brewing. That brewery is in the midst of moving to a new production space and taproom just blocks away. Despite its tiny 750 square feet, Broken Clock’s space has been the birthplace of three brewing companies, with NorthGate Brewing, now located in the Mid-City Industrial neighborhood, passing it onto 56.
Moving into a previous brewing space and adopting the equipment was an “absolute gift,” Mathison said, which put them more than two or three years ahead of their projected timeline. Pulling in capital from investors through MNvest and cultivating a membership base also put them on an accelerated path, he added.
Another side of the business relies on cultivating homebrewers, who have a say over Broken Clock’s production at monthly forums and can submit their own recipes under a unique brewer membership. Mathison said the membership gives homebrewers a taste of what it’s like to open their own brewery.
“This provides that opportunity to take that step. For a $300 investment you really get an education in commercial brewing,” he said.
While the head brewers have the final say over what recipes are marketable and which ones aren’t — one member brews a garlic beer, for example — the member-brewers have the chance to brew their beer on a professional setup and get feedback from a community of beer fans.
“You’re actually at a brewery brewing beer. We’re not just in a garage anymore. It ups the game a little bit for homebrewers to be able to get the commercial side of the brewing,” Johnson said.
Broken Clock Brewing will have four brews when it debuts this spring, including a unique lavender-infused IPA that the brewery has featured at several of its monthly tastings, public events where it has drawn most of its members so far. The beer started as an idea from members.
“Before it was suggested to me I would’ve never considered brewing that beer, but it’s something that we’ve brewed and then tweaked over time, and it’s become something really special that people like,” Hubbard said.
The brewery will also have a kolsch, a stout and the first of its rotating seasonal brews: a coffee kolsch made with beans from Brooklyn Center-based Tiny Footprint Coffee. Hubbard said they are looking to feature more experimental brews in the taproom and showcase member recipes.
Broken Clock will distribute to local bars and liquor stores, especially within a few miles of the brewery at 3134 California St. NE. During their first year, Hubbard said they’re shooting to brew between 500 and 600 barrels. Broken Clock officially moves into its space on April 1.