Issues & AdvocacyGet Involved
WITH BEN MILLER,
Ben Miller is the Managing Partner of WestMill Capital Partners, a real estate development company focused in the Mid-Atlantic, and Co-Manager of Popularise, a real estate crowdsourcing website. He was COO and then President of Western Development Corporation between 2005 and 2010.
After developing expertise in the commercial real estate market, what convinced you that utilizing crowdfunding and selling equity to a broad range of smaller denomination investors was a viable strategy for developing new infrastructure projects?
My brother and I created Fundrise because we felt that traditional real estate investment funds and Wall Street investors lacked a direct connection to the local neighborhoods in which they were investing. As a result, they typically did not have an understanding of what made each neighborhood unique. Then it dawned on us, maybe we had it upside-down? Why couldn’t our friends and neighbors — the local community – be the ones who could invest in local real estate? What if we raised our capital from the bottom-up instead of the top-down. With that, we created an investment platform that could empower a new investor economy, where people come together, invest, and influence the way cities are built.
As the crowdfunding market continues to expand and is applied to large-scale development ventures such as the BD Bacatá, do you consider this to be a model for investments of that scope in the United States? Or are there limitations on the type and size of construction projects best suited for a crowdfunding campaign?
We see crowdfunding online as a powerful tool in gaining access to transform real estate development, but size and legal regulations do play a part in the approach a real estate company should take in utilizing the new tool. For example, with our first public offering, 1351 H Street, we used Regulation A, qualified with the SEC and registered with the securities regulators in Virginia and the District of Columbia. This allowed us to crowdsource investments to Virginia and D.C. residents only, limiting people in other states from investing. There are many complexities involved in crowdfunding, and each campaign should be specifically designed for the project in question.
What do you envision are the prospects for architects nationwide who are considering becoming more involved in the process of self-selecting the architecture projects they work on through crowdfunding? What impact do you believe this can have on infrastructure development? And do you feel crowdfunding lends itself to more creative design projects?
We believe that the future of real estate and development projects relies on creating quality projects that strengthen and develop local communities. Crowdfunding creates a direct connection between the stakeholder and shareholder, generating increased participation and transparency for development projects. This allows people to better understand the projects they care about, what goals and intended uses buildings and infrastructure projects could have, as well as what they might be able to do to assist the development.
For architects, crowdfunding platforms can provide a way to showcase innovative designs, and if they are popular, raise funding directly from local supporters. And if crowdfunding is community based, design can play a major part in whether projects move forward, sparking a need for architects to incorporate innovative, creative and community specific ascetics into their designs.
The 1351 H St. crowdfunding campaign to construct a hybrid food and retail market in Washington, D.C. furthers the use of crowdfunding for projects targeted at community improvement. How do the campaign organizers generate support within the community to invest in these types of projects? And are there best practices you have observed in the crowdfunding market place?
Community targeted projects require understanding what the local people want. We used Popularise, our crowdsourcing tool, to ask the customer, local resident, and other stakeholders what they want to see built in our building at 1351 H Street, to help us figure out how best to develop the property. What Popularise did was bring the community together, by providing a platform for ideas while giving both developers and community stakeholders a voice in real estate development.
We took the information and themes we learned from Popularise to help us develop the property. And because we knew that this project was what the community wanted, we were excited about increasing their participating even further by allowing them to co-invest, amplifying their support. Further, we targeted our marketing efforts to reach local community members and publications, hosting community events, and finding relevant conferences and speaking opportunities.