Contract - November 2016 - 28

Growing Firm Capital Through Investors
by Evelyn M. Lee, AIA

Evelyn M. Lee, AIA, writes
a regular column for Contract
on business practices in design
and professional development.
Lee is a senior strategist at
MKThink, the ideas company
for the built environment
based in San Francisco,
and holds graduate degrees
in architecture, public
administration, and business
administration. Lee is
currently a member of the
AIA national strategic council,
and she previously served
a two-year term on the AIA
national board of directors.
This December, she will
begin another stint on the
AIA national board. In 2014,
she received the AIA Young
Architects Award. Her website
is evelynlee.com.

accredited investors. Since then, platforms such
as WeFunder have come online, giving startups
and small businesses a hassle-free mechanism to
raise anywhere from $20,000 to $5 million by giving
investors the opportunities to invest in companies
that they care about and believe in, whether it
is a mom-and-pop business or something larger.

An example of a design firm investor
The Charrette Venture Group (CVG) launched in
2014, offering the first architecture business plan
competition. CVG was founded by Matt Ostanik,
an architect, entrepreneur, and business leader
who had started and sold a construction software
company, Submittal Exchange. He was looking
for new ways to provide additional resources to
architecture firms in a manner similar to incubators
providing resources for tech firms. To date, CVG
has invested in seven different firms and is now
raising additional funds from interested investors.
The CVG payback model is based on a percentage
of revenues as opposed to an equity stake in
I have had many conversations with design firm
the business.
leaders who lament that they could accomplish
Crowdfunding as a platform for real estate
so much more if they had additional capital. In that
investment continues to grow. A recent study from
same breath, they often mention their frustration
with the fact that, even when the economy is strong, Cambridge Judge Business School estimated that
$484 million was raised for real estate investment
their profit margins do not allow them to invest
in the Americas in 2015. More than 125 real estate
in doing more. It is time to change this dynamic
crowdfunding sites are based in the U.S., including
and look for other ways to both fund good design
and simultaneously prove that it is a good investment. RealtyShares, Fundrise, Realty Mogul, and Patch
of Land. Investment offerings fall under the
How? By attracting investors to invest in your
categories of equity, debt, and Real Estate Investment
firm, a project, or a research area in which you
Trusts, or REITs, for those interested in diversifying
are interested.
their investments over a portfolio of properties.
You may be thinking: How many sharks or
Within these categories, there are many different
venture capitalists would be interested in investing
offerings that one can make to potential investors.
in a professional services firm? Honestly, it is not
For instance, an offering can allow for small growth
a large number. However, the entire pool of potential
investors is not just comprised of venture capitalists. over time without losing any control of the company
or requiring its sale in order for investors to exit.
It includes really any individual with an interest in
To create a successful investment opportunity
making an investment. Considering that, a firm
and attract the right individuals, the firm must
has a tremendous opportunity to raise capital.
present a clear picture of its mission and values, the
I recently viewed a webinar by Jenny Kassan,
goals that it is striving to reach, as well as an ability
an entrepreneur and business attorney with more
to articulate how additional capital would support
than two decades of experience helping clients raise
meeting those goals. Then, consider getting an
millions of dollars. Her client list includes service
opinion from a business attorney. Even with some of
firms such as ArtSpark, CivImpact Labs, Hivequest,
the tools listed above, raising money from investors
The Democracy Collaborative, and SVT Group.
She strongly affirms that any business, large or small, is a highly regulated undertaking with complicated
laws at both the state and federal levels. A good
startup or established, is capable of raising capital
business attorney will be able to understand the
through an investment offering. Many of the offers
various legal compliance strategies and work with
that she has worked with clients to create allow
you to create a plan that is unique to your company
them to stay in complete control of the company
and its fundraising goals.
and keep their investors happy with small, steady
Good design is a good investment, and we
returns over time.
have known this for a long time. Let's give individuals
How much can you raise? As of May 16,
the opportunity to join us as investors and prove once
2016, the JOBS Act created a path supporting
and for all that good design is good for everyone. c
crowdfunding as a method for organizations to raise
up to $1 million as well as a provision (Title III) that
makes it possible to raise unlimited funds from
contractdesign.com

NOVEMBER 2016

PHOTOGRAPHY: CARL BOWER

COLUMNIST

http://www.evelynlee.com http://www.contractdesign.com

Contract - November 2016

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