Real estate investment hasn’t always had the best reputation. House flipping, gentrification anxiety, and opaque LLCs have characterized a popular perspective on the industry. But Pittsburgh-based Small Change is a young company seeking to democratize the field and shift who participates in real estate investment—and how. Founded and led by architect-developer Eve Picker, Small Change has become a platform for minority and female developers, among others, seeking crowd-sourced funding to get smaller-scale projects that have positive impacts on their communities off the ground.
Crowdfunding’s heyday was born from ArtistShare, Kickstarter, Indiegogo, and their ilk operating under the premise that anyone should be able to invest in a good idea. But Small Change and other crowdfunded real estate platforms were facilitated by former President Barack Obama’s 2012 Jumpstart Our Business Startup (JOBS) Act and subsequent changes to Securities Exchange Commission (SEC) regulations, which allowed non-accredited investors (whose net worth and income are relatively low) to invest relatively small amounts of money into businesses. For real estate, this meant that anyone, with any income or net worth, could invest in eligible commercial or housing projects and receive returns on the project’s success; developers can raise up to $50 million from crowdfunded sources. While some projects featured on Small Change are for accredited investors only, many are open to everyone.
Bungalow Gardens, one of Small Change’s projects, which is meant to deal with homelessness
Dwell spoke with Picker about why Small Change is focusing on underserved markets and emerging developers, and how crowdfunding can launch new, equitable developments in areas that require more housing—but may be less attractive to big capital.
When you founded Small Change, what was happening in the real estate market and the conditions around development?
I started doing small-scale real estate development in Pittsburgh and was fascinated by the city that had died and was being reborn. There’s some pretty amazing architecture here, and I thought there were opportunities in places that people were ignoring. My primary partner was the Urban Redevelopment Authority which, at the time, had relationships with small community banks. In the late 2000s, there was like a tsunami of events: The banking market melted down, and it rapidly became much more difficult to do these projects because banks required much more equity, which was very hard for a small developer.
At the same time, the Urban Redevelopment Authority had lost its funding stream because of Bush administration cutbacks. So that was my major equity partner gone. Simultaneously, banks were consolidating rapidly—it felt like community banking died. I had built a portfolio of about 10 small projects at that point that really required all of these partnerships to work and it just became impossible. So I started packing up my business. And then in 2015, I met with a builder who had some securities background, and told me about the 2012 JOBS Act.
Rosewood, a housing development funded on Small Change
When the JOBS Act passed, how did it change the way you thought about real estate development?
The JOBS Act was the Obama administration’s first attempt to democratize investment, and I was fascinated, because I thought that my story would have ended differently if my neighbors and the people who followed me in Pittsburgh could have invested in my projects. That’s what sparked Small Change: I knew of other developers doing this type of work, who were having the same issues, at least in these small neighborhood-centric projects. And I thought, Look, here’s a really interesting way to think about financing the equity piece of projects like this for developers who perhaps don’t have a huge wealth network, and are doing really important, interesting work.
After the JOBS Act passed, we got to list fundraisers for developers to raise money from anyone over 18. And developers get to decide what the minimum amount will be. We have one offering online right now with a minimum amount of $100. They’re building a project in a very poor neighborhood, and they’re committed to making sure the neighborhood is engaged. So that’s pretty radical. But this rule was really written with small businesses in mind, not real estate. It happens to work well for real estate.
The King Henry project proposes converting a parking lot into new housing in Alexandria
You talk on your website about fundraising for impact investments. What does that look like?
When we started down this road, we were looking for a way to describe what impact and change meant. Essentially, we wanted to create a minimum impact bar for investors to list on our sites. We didn’t want to help raise money for projects that could have easy access to funds in other ways. For example, a Dunkin’ Donuts in a suburban mall would just not be a fit. We’re looking for projects that either impact the environment or have a team that is emerging and has never had this sort of opportunity before and also for investors who’ve never had this opportunity before. Today, 63 percent of the developers on our platform are minority- and woman-led—and if you’ve ever been to a real estate event, you know that’s just unheard of. We don’t advertise to developers, they’re coming to us through word of mouth.
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