The Development Of Tiger Stadium Is Case Study For Fundraising
Fundrise, a firm that we have been following for a while at The Garibaldi Group, is a crowdfunding website specific to real estate. The platform enables developers to seek investment from everyday people as oppose to the usual corporate investment outlets. Crowdfunding has been a popular trend in the art and entertainment world, as well as with small businesses but for use on the large scale of corporate real estate it is still a brand new concept.
Last week in the Wall Street Journal contributor Max Taves described the case of the old Tiger Stadium, a now demolished land site that has been approved by the economic development office of Detroit for redevelopment by Larson Realty Group. To help accrue the $32.6 million dollars required, Larson is utilizing crowdfunding to be responsible for 10% of the equity generated to fund the project ($4.3 million). Because of the connection many local resident feel to the old ball park and the land that it use to call home, Eric Larson of Larson Realty Group thought the project would be a perfect case to put Fundrise to use. “This is a way to reach people who I couldn’t reach through the normal financial processes,” says Mr. Larson, “I’m hoping that I get a lot of moms and dads and grandparents walking by and saying I own a piece of that corner.”
Residents interested in investing in the project are allowed to contribute as little as $100 through Fundrise, and by doing so will be offered returns that will be scaled in accordance with how much money they invested. At this point in time those returns are still yet to be determined. Other crowdfunding projects offer things like a free DVD or theater tickets when trying to entice people to contribute to the production of an independent film, or a free signed copy of an album when a band is trying to gather up funding to record their next project. The article discusses how the trend of crowdfunding began, which they credit to “the U.S. Jumpstart Our Business Startups Act, which loosened a Depression-era securities regulation prohibiting companies from advertising investment opportunities to the general public”. That act was passed in 2012 and since companies like Kickstarter, GoFundMe.com, Indiegogo and many more have sprouted up and made it easy for anyone to take that next step with their hobby, talent, business or otherwise.
To read the article in its entirety go here.
To learn more about Fundrise, watch Fundrise CEO Ben Miller conduct a Ted Talk back in 2014 where he explains the inspiration for the company and how he believes it will reshape the commercial real estate market and urban development for years and decades to come.