More typically a co-op will raise funds from members via shares. I'm a bit shaky on specifics, but those shares may be capable of being sold back (to the co-op as a whole). Voting righs often _don't_ accrue per share.

Debt financing, as mentioned, is another alternative.

Read with caution, I'm really sketchy on details.

Probably this would be debt rather than equity.

> I don't think employees are investors in co-ops.

Typically, they are; their ownership stake is usually, as I understand, purchased on credit and sold back on separation.

> A co-op can still get capital from investors. Can't they?

Well, yes, in the form of debt, and perhaps non-voting equity depending on the particular rules applicable to coops where the coop is organized.

The problem with that is there are tax implications to giving someone a chunk of a company (it's technically income), even if it is completely illiquid. Tax implications the employee probably can't afford much better than a buy-in.

It depends is some coops members do have to ante up the Spanish Mondragon coop is an example.

And by definition the members of the coop must own the coop or own a controlling interest