Bee Breeders, in partnership with ARCHHIVE Books, would like to present a preview article from an upcoming print publication “What is Affordable Housing”? This time we would like to introduce you to rabble.
“To some degree what we’re doing is like an investment bank, to some degree like private equity, and to some degree like crowdfunding,” said Umber Bawa, CEO of rabble, a NYC-based platform for developing and managing ‘impact investments’ that have social or environmental benefits along with financial returns.
Rabble, started in 2016, is also like a tech company, finding new ways to democratize financial investing by removing some of the barriers that make it difficult for non-accredited investors to put capital into their communities. Funds generated by rabble are used for investments like property acquisition, rehabilitation and development, adaptive reuse, historic preservation of buildings, and new construction.
Bawa’s team chooses projects deemed socially or environmentally impactful. It then structures the offering and manages transactions for these investment opportunities. Rabble’s first investment project in 2017 funded the sustainable revitalization of 32 homes in midtown Detroit. It was backed by community and non-local investors, and operated by a local real estate investment firm. The project’s long-term goal is to regenerate neighborhoods that were negatively affected by the region’s poor economy of the last decade, and providing returns and dividends proportional to initial investments from the operation of these properties over 5 years.
The homes are aimed toward middle income and young people who wish to rent well-built, beautiful houses, a property type lacking in midtown Detroit. By providing for this target market, Bawa explained: “You are improving housing and improving the neighborhood, and that leads to economic progress, increasing property values and stronger public services in places which sorely need it, by generating revenue through a tax base.” It also generates employment with the hiring of local builders.
Rabble’s platform for crowdfunded investment was made possible by Title IV of the JOBS Act, a 2015 legislation which permits private companies to raise investment from a range of investors at all income levels. This means even less-seasoned investors with little knowledge of markets, can earn financial returns from projects by contributing initial capital.
“We have innovative projects that exist in the world, and there’s people on the ground that may not be institutional investors, and they have a passion for perhaps renewable energy or green building or urban agriculture, or vertical farming,” said Bawa “And I was like: Now that there’s this new law coming out, this is a really good opportunity for us to actually get to connect non-traditional investors with projects that people already believe in.”
According to Bawa, institutional or accredited investors already have a wide range of existing investment options, and their primary motivating force is financial returns. “Now when you look at the average person who doesn’t have access to these private equity or hedge fund opportunities, they have a different mindset, a different approach in terms of what they’re looking for,” said Bawa. “They might want to support their local business. They might not care if they are not getting 20 percent returns, one because they don’t have access to those type of opportunities, but two, because they actually care about their community or their environment.” Rabble’s goal is to connect these investors with projects that are more innovative, or that have a social or environmental impact - factors that are hard to quantify.
Bawa’s own background is in renewable energy and project finance, having worked in the past with a forward-thinking cleantech company in Colorado. He has learned about the struggles for funding ideas off the beaten path that may not generate income from typical rent-based models. “A traditional solar power plant or wind farm - financing something like that is actually not that challenging, because those types of projects are well understood, and they’ve been around for some 30 years,” he said. “The second you start to introduce a little bit of weirdness, meaning if you’re trying to build a micro-grid, or if you’re trying to combine solar plus storage, or solar plus wind plus storage, the challenge becomes financing these projects.”
Reasonably so, people who don’t fully understand the characteristics of innovative projects, are fundamentally more hesitant to finance them. And much of the capital for these projects is then absorbed by the costs of due diligence. “Rather than, say, a 25 percent internal rate of return, an investor might instead see 10 percent, at best, meaning its difficult to attract institutional investors,” said Bawa. “We have pretty extreme diligence, and if you look at our team that’s kind of what we pride ourselves in.” Rabble’s advisory group hails from a range of backgrounds in cleantech finance, private equity, sustainability, engineering and investment management.
New investment opportunities on Rabble’s radar include green building, passive energy construction, projects that achieve LEED rating, or net-zero buildings. Rabble’s newest venture, opened for investment in May, will fund the development of a 10-acre, 3D ocean farm on the coast of Maine. Such farms are “highly productive, ecologically designed poly-cultures cultivated within varying levels of the water column that combine finfish, shellfish and high value seaweeds,” the project’s statement reads. The farm will produce profitable seaweed and shellfish products that enhance ocean ecosystems and support regional economies, with the goal of enabling sales and profit within a year of operation.
rabbleworks.com (twitter @rabbleworks)
Umber Bawa is the CEO of rabble. He led project finance and strategic initiatives at Spirae, a Colorado-based cleantech firm, where he created financial models for renewable-based microgrid and smart city projects, and led smart city initiatives in North America and Europe. Umber is a graduate of The Wharton School, University of Pennsylvania.
ARCHHIVE is an annual print publication expanding on the ideas presented in Bee Breeders’ online architectural design competitions. Bee Breeders is a generator of new ideas, conceived by a worldwide think tank, for tackling challenging design issues. It often works with civic, industry, or government partners to initiate its competitions, some of which are conceptual while others are intended to be built.
Each issue of ARCHHIVE will bring together architects with startups, entrepreneurs, developers, and problem-solving organizations which tackle these same global issues, often in ways other than building. ARCHHIVE merges the wealth of Bee Breeders’ novel architectural design proposals, with complementary ideas in entrepreneurship, policy, and technology.
Bee Breeders and ARCHHIVE are calling for essay submissions to be included in its inaugural issue. Share your thoughts about the global housing crisis, or solutions for affordable housing! Submit your ideas - either written or illustrated - here
Registration and submission deadline - August 25, 2018!