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New real estate crowdfunding site focuses on community development

Small Change wants to help develop cities, one small investment at a time

Pittsburgh’s Liberty Bank Building, which has been turned into a coworking space due in part to funds raised via the Small Change crowdfunding platform.
Rob Larson

Eve Picker has discovered that it doesn’t always pay to be first, a maxim that goes double for real estate.

The architect and urban designer has spent the last 15 years developing the Liberty Bank Building in Pittsburgh. Once an abandoned structure so run down “you could fly a plane through it,” the commercial building in the city’s East Liberty neighborhood has been redeveloped and revitalized by Picker twice, once when she bought it in 2003, and again over the last year, as she’s helped a co-working startup, Beauty Shoppe, take over and manage the entire building. Banks have been wary to fund such a move, since it’s a new business model and leasing arrangement.

Picker decided she needed to find a better way to raise capital, share risk, and get people in the community, those with the most to gain from a new business or development, engaged and involved.

The Liberty Bank Building.
Rob Larson

That’s the promise behind Small Change, a new real estate fundraising platform Picker founded that’s designed to help communities play a bigger role in their own redevelopment. Often, smaller projects rely on a grab bag of funding, including community development block grants and scores of small investors, making the process of assembling capital time-consuming. By creating a platform that anybody with enough money can use—some projects take investments as small as $500—Small Change seeks to democratize and streamline the entire funding process and help buttress “transformational” developments.

Since starting last summer, the platform has raised more than half a million dollars, and Picker was named a Global Urban Innovator by the NewCities Foundation,

“Community development is stymied by banking regulations,” Picker says. “They’re not doing any favors for cities and neighborhoods that need to change, that’s for sure.”

Crowdfunding has existed for years, and other firms, such as FundRise and Realty Mogul, have focused on property development, but the Small Change model offers a new spin for the real estate space. For years, financial regulations, initially designed to protect from fraud, limited real estate investment to “accredited investors,” who are pre-approved and required to have $1 million in capital, cutting off a vast majority of potential investors. Only in the last year have regulations been loosened on so-called “equity crowdfunding” (where investors look for a return) to allow more people to get involved in these types of real estate projects.

So far, Small Change has been used by developers for projects in a handful of cities, including Marlboro Pike, an affordable and energy-efficient apartment project in Washington, D.C. Most campaigns last from two months to 10 weeks, and have sought to raise up to $300,000.

Construction on the 5016 Rosewood site, an LA development partially funded via Small Change.
Small Change

Paul Lin and Danny Cerezo, two Los Angeles-based developers, recently used Small Change for 5016 Rosewood, a series of single-family detached units in the Larchmont neighborhood. They raised $175,000, a portion of the project’s final cost, in eight weeks from 11 people, about 60 percent who live in L.A. They didn’t need to use the platform, says Lin, but wanted to treat the project as a test case and help promote the mission of supporting small projects that can change neighborhoods. They would definitely use it again for future projects.

“We’ve found that this platform attracts investors, and allows them to come to us,” he says. “Traditionally, we have to network and reach out to friends, families, and associates. It just takes more effort on our part to reach the right audience. Small Change helps us reach out without having to do as much work.”

Picker believes the real value of this platform isn’t in cities such as Los Angeles, but places such as Detroit, Pittsburgh, and Cincinnati, which have engaged communities but are off the radar of many high-end investors.

“These cities have people who want to be engaged and make a change,” she says. “Small Change could be a really useful tool.”