2
i This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Review our Privacy and Cookie Notice for more details. x subscribe contact us advertise industry jobs events FAQ Welcome brian | Your Account | logout » share: more » print email Related Links: Entrepreneurs Taking Tool Ideas to Kickstarter White House Rolls Out New Private Infrastructure Finance Plans Advertising ROSS Text size: A A comment Issue: 04/20/2015 Entrepreneurs Hope To Bring Crowdfunding To P3 Projects 04/14/2015 By Aileen Cho If a fledgling venture succeeds, members of the public might be able to participate in crowdfunded public private partnerships for infrastructure projects. Brian Ross, a former construction manager, conceived the idea in fall 2013 and formed a venture called InfraShares with Pablo Nunez, an entrepreneur with P3 experience in Europe and India. Ross envisions that individual investors will be able to peruse P3 projects and make investments accordingly, through the website InfraShares . Through his experience with P3s in waterwastewater, Ross says, "one common criticism was that foreign firms were the main investors getting big returns, but there was no investment opportunity for the local community." Ross has been contacting numerous public and private infrastructure stakeholders. "The feedback is that it is a good idea, but they're not sure how the mechanics are going to work," he says. "P3s are rather new in the U.S., and crowd funding is totally new." Morteza Farajian, program manager with the Virginia Office of Public Private Partnerships, last year led the writing of an academic paper on crowdfunding and P3s as part of his graduate thesis. The paper, submitted to the Transportation Research Board, notes that the 2012 JOBS Act "removed the Securities and Exchange Commission's restriction on public offerings, allowing for 'crowdfunding' equity investment in new ventures. InfraShares allows P3 developers to raise equity from a broad base of individual investors, which increases public engagement and drives political support." Says Farajian, "This could be the next wave that comes to project delivery." He says he and Ross discussed how to get state transportation departments to embrace the concept based on Farajian's study of actual P3 projects. The InfraShares website is targeting qualified individuals and couples that have a net worth exceeding $1 million, not including the primary residence; an annual income of $200,000 in each of the two most recent years; or joint income with a spouse exceeding $300,000. Once InfraShares partners with a P3 developer and launches a crowdfunding campaign, an accredited investor can read about it on the site and invest as little as $500. If the funding goal is reached, the investors all join a limited liability company. Investor revenue would come from monthly interest payments; in the case of an equity investment, from user fees or availability payments; and a share of the proceeds when the asset is sold or refinanced. Still in the prototype phase, the website does not yet have a list of projects. Ross says he has reached out to states with active P3 efforts, such as the proposed Purple Line transit project in Baltimore, the Pennsylvania P3 bridge bundling and Colorado's Interstate 70 project. "SEC only just finalized the rulemaking on the crowdfunding legislation. How will we implement it?" Ross asks. "I've been doing the deep dive on how this will work. I believe I've come up with solutions, but it's now a matter of perception in trying to get the broader community to accept this as a viable concept." One inherent challenge is that, while crowdfunding can raise millions of dollars, public infrastructure projects under P3s will cost billions of dollars, notes Brad Guilmino, national director of financial services at HNTB Corp. "I think the bigger thing is for individual investors to know how to analyze this asset and understand their risk factors." Both Guilmino and Farajian note that the perceived social benefit of a project in one's community may be a big plus. Advertising This week's content Archive Subscribe to ENR Order back issues Manage Subscription Newsletter Subscriptions Most Viewed on ENR.com The 10 Longest Arch Bridges in the World Overhaul of San Ysidro Land Port of Entry Burdened by Myriad Site Constraints Superfund Manager Convicted in Bidrig Scheme Must Pay $4.36M Most Commented On enr.com Architect Swanke Hayden Connell Files for Bankruptcy Protection Review: The Lego Movie is a Blockbuster, Sort Of Video SUBSCRIBE TODAY Web access will be provided as part of your subscription. Search our site: Enter your search... INFRASTRUCTURE BLDGS BIZ MGMT POLICY EQUIPMENT PEOPLE MULTIMEDIA OPINION TECH EDUCATION ECONOMICS TOP LISTS REGIONS SAFETY & HEALTH WORKFORCE FINANCE COMPANIES PROJECT DELIVERY ETHICS & CORRUPTION

Entrepreneurs Hope To Bring Crowdfunding To P3 Projects _ ENR

Embed Size (px)

Citation preview

Page 1: Entrepreneurs Hope To Bring Crowdfunding To P3 Projects _ ENR

4/22/2015 Entrepreneurs Hope To Bring Crowdfunding To P3 Projects | ENR

http://enr.construction.com/business_management/finance/2015/0420entrepreneurshopetobringcrowdfundingtop3projects.asp 1/2

i This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Review our Privacy and Cookie Notice for more details. x

subscribe contact us advertise industry jobs events FAQ Welcome brian | Your Account | logout »

share: more » print email

Related Links:Entrepreneurs Taking Tool Ideas to KickstarterWhite House Rolls Out New Private InfrastructureFinance Plans

Advertising

ROSS

Text size: A A

comment

Issue: 04/20/2015

Entrepreneurs Hope To Bring Crowdfunding To P3 Projects04/14/2015

By Aileen Cho

If a fledgling venture succeeds, members of the publicmight be able to participate in crowdfunded publicprivate partnerships for infrastructure projects.

Brian Ross, a former construction manager, conceivedthe idea in fall 2013 and formed a venture calledInfraShares with Pablo Nunez, an entrepreneur with P3experience in Europe and India. Ross envisions thatindividual investors will be able to peruse P3 projectsand make investments accordingly, through the websiteInfraShares.

Through his experience with P3s in waterwastewater,Ross says, "one common criticism was that foreign firmswere the main investors getting big returns, but there wasno investment opportunity for the local community."

Ross has been contacting numerouspublic and private infrastructurestakeholders. "The feedback is that itis a good idea, but they're not surehow the mechanics are going towork," he says. "P3s are rather new inthe U.S., and crowd funding is totallynew."

Morteza Farajian, program managerwith the Virginia Office of PublicPrivate Partnerships, last year led the writing of anacademic paper on crowdfunding and P3s as part of his

graduate thesis. The paper, submitted to the Transportation Research Board, notes that the 2012 JOBS Act "removedthe Securities and Exchange Commission's restriction on public offerings, allowing for 'crowdfunding' equityinvestment in new ventures. InfraShares allows P3 developers to raise equity from a broad base of individualinvestors, which increases public engagement and drives political support."

Says Farajian, "This could be the next wave that comes to project delivery." He says he and Ross discussed how toget state transportation departments to embrace the concept based on Farajian's study of actual P3 projects.

The InfraShares website is targeting qualified individuals and couples that have a net worth exceeding $1 million, notincluding the primary residence; an annual income of $200,000 in each of the two most recent years; or joint incomewith a spouse exceeding $300,000.

Once InfraShares partners with a P3 developer and launches a crowdfunding campaign, an accredited investor canread about it on the site and invest as little as $500. If the funding goal is reached, the investors all join a limitedliability company. Investor revenue would come from monthly interest payments; in the case of an equity investment,from user fees or availability payments; and a share of the proceeds when the asset is sold or refinanced.

Still in the prototype phase, the website does not yet have a list of projects. Ross says he has reached out to stateswith active P3 efforts, such as the proposed Purple Line transit project in Baltimore, the Pennsylvania P3 bridgebundling and Colorado's Interstate 70 project.

"SEC only just finalized the rulemaking on the crowdfunding legislation. How will we implement it?" Ross asks. "I'vebeen doing the deep dive on how this will work. I believe I've come up with solutions, but it's now a matter ofperception in trying to get the broader community to accept this as a viable concept."

One inherent challenge is that, while crowdfunding can raise millions of dollars, public infrastructure projects underP3s will cost billions of dollars, notes Brad Guilmino, national director of financial services at HNTB Corp. "I think thebigger thing is for individual investors to know how to analyze this asset and understand their risk factors."

Both Guilmino and Farajian note that the perceived social benefit of a project in one's community may be a big plus.

Advertising

This week's content

Archive

Subscribe to ENR

Order back issues

Manage SubscriptionNewsletterSubscriptions

Most Viewed on ENR.comThe 10 Longest Arch Bridges in the World

Overhaul of San Ysidro Land Port of Entry Burdened byMyriad Site Constraints

Superfund Manager Convicted in Bidrig Scheme MustPay $4.36M

Most Commented On enr.comArchitect Swanke Hayden Connell Files for BankruptcyProtection

Review: The Lego Movie is a Blockbuster, Sort Of

Video

SUBSCRIBE TODAYWeb access will be providedas part of your subscription.

Search our site: Enter your search...

INFRASTRUCTURE BLDGS BIZ MGMT POLICY EQUIPMENT PEOPLE MULTIMEDIA OPINION TECH EDUCATION ECONOMICS TOP LISTS REGIONS

SAFETY & HEALTH WORKFORCE FINANCE COMPANIES PROJECT DELIVERY ETHICS & CORRUPTION

Page 2: Entrepreneurs Hope To Bring Crowdfunding To P3 Projects _ ENR

4/22/2015 Entrepreneurs Hope To Bring Crowdfunding To P3 Projects | ENR

http://enr.construction.com/business_management/finance/2015/0420entrepreneurshopetobringcrowdfundingtop3projects.asp 2/2

"Individual investors [may] accept a lower rate of return due to lack of pursuit risk and perceived social return," statesFarajian's paper.

Public reluctance to raise the federal fuel tax to help fund projects has pushed the movement to develop userfeebased alternatives, and this idea can help further that discussion, says Guilmino. "[With this website], you can pickand choose an asset you believe in," he says.

Keywords: Crowdfunding; InfraShares; P3s; Bonds; Infrastructure; Investment

View all Videos »

Blogs: ENR Staff Blogs: Other Voices

Critical Path: ENR's editors and bloggers deliver theirinsights, opinions, coolheaded analysis and hotheadedrantings

ENR Northwest Now AcceptingSubmissions For Region's BestProjects CompetitionBy: johng5554/17/2015 1:36 PM CDT

ENR Texas & Louisiana NowAccepting Submissions ForRegion's Best ProjectsCompetitionBy: louise.poirier4/17/2015 1:30 PM CDT

ENR Midwest Now AcceptingSubmissions For Region's BestProjects CompetitionBy: johng5554/17/2015 1:06 PM CDT

View all Posts »

Project Leads/PulseGives readers a glimpse of who is planning andconstructing some of the largest projects throughoutthe U.S. Much information for pulse is derived fromMcGrawHill Construction Dodge.

For more information on a project in Pulse that has aDR#, or for general information on Dodge productsand services, please visit our Website atwww.dodge.construction.com.

Information is provided on construction projects infollowing stages in each issue of ENR: Planning,Contracts/Bids/Proposals and Bid/Proposal Dates.

View all Project Leads/Pulse »

Subscribe to ENR | Back Issues | Manage your subscription | Get Top List Merchandise

Reader Comments:

Add a comment

Submit

We welcome comments from all points of view. Offtopic or abusive comments, however, will be removed at the editors’ discretion.

View This Week's Magazine | Go to Magazine Archives | Subscribe to ENR | Order Back Issues

resources | editorial calendar | contact us | about us | submissions | site map | ENR subscriber login | ENR communityback issues | advertise | terms of use | privacy and cookie notice | © 2015 Dodge Data & Analytics. All Rights Reserved