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Small Change: The Crowdfunding Site That Makes Neighborhoods Better Places to Live

Amy Cortese | April 24, 2018

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Eve Picker is an architect, city planner, urban designer and real estate developer, among other accomplishments. Her passion for community development and smart, sustainable design led her in 2016 to found Small Change, a Pittsburgh-based real estate crowdfunding site. We caught up with Eve recently to discuss financing transformational projects—such as affordable starter homes built on odd lots, like the one pictured above in New Orleans—and the next wave of commercial real estate crowdfunding. 

Locavesting: Tell us a little bit about your background and why you started Small Change?

Eve Picker: I’m obsessed with cities. I’ve a background as an architect and urban designer and made a career of developing buildings in Pittsburgh neighborhoods that were difficult to finance. So, I became an expert detective when it came to sourcing ways to finance my projects. One of my more notable projects had 12 different financing sources. The JOBS Act was introduced to me by someone who had worked in the securities world and I was certain that it provided a path to financing transformational, hard-to-finance, projects.

Real estate has been one of the most successful segments of crowdfunding, although most of the activity has been reserved for accredited investors. What are the gaps you are trying to fill with Small Change? 

I’m a real estate investor myself. I’ve been puzzled and frustrated by the direction that the real estate equity crowdfunding industry has taken. “Success” in the industry to date has not done much to address the gaping holes in financing tools for projects that make cities, neighborhoods, small towns better places to live in. “Success” to date has been the first wave – finding a way to let the crowd invest in real estate. In this first wave, buildings are merely something to make money on.

Eve Picker, founder & CEO of Small Change

We want to do more than that with Small Change. Yes, we want to offer financially successful projects on our platform. But we also want to stretch ourselves and offer projects that people can relate to, projects that make their community better, projects that make a positive transformational impact and projects that you can feel good about investing in. Often these are projects that cannot find bank financing because they are first of their kind, a little eccentric, or a passion project. But I will tell you, that as a real estate investor, those are the deals that I want to invest in personally. And I have to believe that there are lots of other people out there like me.

Consider us the next wave in the industry.

Some people say that Reg CF isn’t well suited for real estate projects because of the $1 million cap (now $1.07 million). You have a different view…

We’re in love with Regulation Crowdfunding and won’t give up on it. In our world $1 million raised for a real estate project can go a long way. If a bank requires 25% equity, that $1 million raised helps to finance a $4 million project. There are plenty of real estate projects in plenty of cities that would fit this bill. And many platforms are offering side-by-side Reg D and Reg CF offerings which helps to increase the cap. We will be soon too.

What are the benefits for developers in engaging the public as investors?

There are countless benefits. With equity crowdfunding developers have the chance to truly partner with the community they are working in. They can get buy-in from their neighbors. They can go to a planning meeting with a crowd supporting them (it’s hard for a city to say no to that). They can give the community a chance to enjoy the financial return of the asset along with them. And they can build a group of dedicated and loyal equity partners. Investors like coming back to invest with a developer they know. All of this can only build goodwill. It creates a lasting relationship where people are literally invested in the work a developer does in the places they champion.

What sort of development projects are a good fit for your site?

So very many. I’m astounded by the creativity in the real estate development community. This has been the most joyful aspect of our work. Our mission is clear and developers who come to us get it. They have the same mission.  We all want to do something more than just build a building. We want to build a building that makes a place better. Our Change Index keeps us honest.  We use it to make sure that projects include impactful measures, such as affordability or job creation.

Small Change At A Glance

Based: Pittsburgh

Type: Regulation Crowdfunding and Regulation D

Focus: Commercial real estate that helps transform neighborhoods

Fees: For Reg CF, 5% of capital raised (subject to change)

Any projects you would not do? 

Projects that don’t fit our Change Index criteria.

What have been the biggest challenges to date for Small Change? 

There are so very many challenges. But that’s the fun (and pain) of a startup. We’re heavily regulated. We’re in a brand-new industry. It’s an expensive world to operate in – technology costs, insurance premiums, compliance consultants, marketing and top-notch lawyers are a must to operate in this landscape. There is no escaping any of that and all of it brings challenges.

Tell us about some of the projects you have helped to fund and what you’ve learned so far. 

Projects on Small Change have and will span the spectrum, from a mixed-use historic walk-up to an affordable housing rehab with one of the largest residential solar panel installations in the country. We’ve offered both Regulation D and Regulation Crowdfunding opportunities on our platform, and we’ve offered a variety of terms. We’re still learning what resonates with our crowd. But the thing that remains constant is a belief that our crowd is driven by the strength of the story behind a project and the narrative around change.

What’s next for Small Change? 

In the very immediate, going to London for the New Cities Foundation “Crowdsourcing the City” conference. New Cities has a global following. It will be fun to compare notes with leaders in this industry from other countries.

Creativity and innovation are essential to the evolution of places and to creating ever better cities.

There’s lots of change afoot at Small Change. Our team is growing quickly to keep up with our quickly expanding pipeline of potential developers. We are in a multitude of places, like Baltimore, Los Angeles and Philadelphia. We’ll be launching side-by-side offerings soon as well so that accredited investors can invest side-by-side with unaccredited. And we want to do more. It’s hard to be patient when there is so much to tackle.

You have said that “financial institutions are squashing innovation in cities.” How so? 

Financial institutions are bound by rules that make it difficult for them to finance something new, something never been built before. This is so sad, because creativity and innovation are essential to the evolution of places and to creating ever better cities.

We want to stayed centered in innovation at Small Change. We’re plotting a path, through the rule-bound maze of securities regulations, to go where banks dare not. And the crowd is leading the way.

But there are risks to investing, right?

An investment in Regulation Crowdfunding involves the risk of loss, there is no guarantee that any project will be successful, and there may not be a secondary market to sell securities.  You should not invest any funds in a Regulation Crowdfunding offering unless you can afford to lose your entire investment and you should understand the risks associated with investing in real estate.  

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