What is crowd-invested placemaking and why is it the next step?
This site is all about crowdsourced placemaking; sourcing crowds to make extraordinary places, and to see that in action, check out the CSPM Group. The next step is allowing the crowd to contribute financially to see their visions come to life – crowd-invested placemaking. Crowd-invested placemaking actually wasn’t legal until April 5, 2012, with the passage of the JOBS Act (Jumpstart Our Business Startups) to allow crowdfunding with a return on investment. Up until then, you could crowdfund things, like on Kickstarter and dozens of other similar services, but you couldn’t expect a financial return.
With crowdfunding, people contributed financially to something that provided a social and meaningful return, something they could share with friends and family. With crowd-investing, they can get a financial return as well. With crowd-invested placemaking however, people can see their contributions manifested in an entire building or block, an entire business or main street of businesses, revitalizing an entire neighborhood. When combined with others looking to do the same thing, this is true community investing.
What are the trends leading to this? People are looking for alternatives to the single-bottom-line focus of the stock market, where there is no personal connection to the companies, and nor do the companies have a connection to them. For the first time, we can collectively invest up to a million dollars in individual buildings and businesses, and when taken as a portfolio, that can quickly exceed tens of millions. Again, for the first time, crowds now have a platform by which to compete with institutional investors. What’s the significance of that? Institutional investors cannot invest in anything less than $5 million, and human-scaled buildings only need a fraction of that. Thus, given the fact that most of our investment is done via institutional investment, most of our buildings today are by default institutionally-sized block-long buildings. Learn more at the previous entry, “Moving the tipping point for creative places“.
When is crowd-invested placemaking going to happen? Very soon. There are groups working diligently on providing such a service. Basically, crowdfunding (legal, prominent, ubiquitous) + JOBS Act + time = crowd-invested placemaking.
What kinds of places will people invest in? Our communities will host fewer institutionally-sized buildings designed to provide financial returns for people who have never been there. Instead, they’ll begin to look like the places that the people who actually live and work there would truly like it to be.
Thanks to Pierre De Villiers for inspiring this entry.
[Update August 7, 2012: Very soon indeed. Check out fundrise.com: “A new way for community members to invest in local real estate and businesses. Fundrise’s goal is to provide local investment opportunitiesâ€”at an accessible entry pointâ€”to earn potential financial returns, while building the city you want. Like you, we believe local communities know what they want and Fundrise is helping to provide a positive way to contribute to neighborhood developments.”]