Kickstarter connects you with people willing to fund the innovative idea you’re working on in your garage. Why can’t you get funding for the innovative idea you have for the vacant storefront down the block?
may have an answer. Co-founders Justin Ley and David Berglund, who work together at UnitedHealth, recently finalized and launched a first-of-its-kind crowdsourcing/funding platform that allows users to post vacant properties, post and vote on ideas for new onsite businesses or public uses, and fund entrepreneurs willing and able to turn those ideas into tangible businesses.
Property owners, real estate brokers, entrepreneurs and Twin Cities residents mingle on its website, exploring property listings, offering ideas, gauging interest and forging new connections.
“The goal of Hoodstarter is to connect neighborhood and city residents — anyone with a stake in and ideas for the vacant space — with real estate brokers equipped to market empty properties, property owners looking to monetize their holdings, and companies or entrepreneurs willing to shoulder the risk of launching a new use,” says Berglund.
“We’re facilitating connections between all the parties to a typical real estate transaction,” adds Ley, “including community members directly and indirectly affected by the project. Basically, we’re taking a model that hasn’t changed in 50 years” — commercial real estate development — “and making it much more efficient, while also creating opportunities for businesses and ideas that might not have access to other sources of funding.”
Though the platform hasn’t yet provided direct funding for any nascent businesses, the founders follow the well-worn model used by other successful crowdfunding platforms: taking a five-percent cut of users’ contributions and passing the rest along to entrepreneurs.
Hoodstarter’s database includes vacant sites across the Twin Cities, from expansive, high-visibility spaces like the unoccupied retail level at St. Paul’s new West Side Flats
to abandoned churches and petite storefronts along community corridors like Chicago and James avenues in Minneapolis.
In addition to listings with detailed information about the property, including its price per square foot (when publicly available), leasing agent and amenities, Hoodstarter has a social function that supports lively debate over user-generated ideas, posted properties and urban life in general. The community is largely self-policing: A recent post suggesting that a prime Chicago Avenue storefront be left vacant was met with swift, if polite, criticism.
Less than a year and a half since its initial launch, Hoodstarter is already gaining traction across the Twin Cities. “When you see a vacant lot or storefront, there’s an intrinsic desire to envision its potential,” says Ley, especially if it’s in your neighborhood. “You can’t help but wonder, ‘Why has that place been vacant for so long?’ It’s a frustrating feeling.”
The South Minneapolis resident speaks from experience. His commute takes him past the same vacant space
every day — a retail storefront empty for so long that no one quite remembers what it used to be.
Ley’s “pet” storefront crisply illustrates the problems Hoodstarter seeks to remedy. The property sits on an otherwise busy corner, near Angry Catfish
, the Baker’s Wife and other popular businesses. It has obvious assets: space for indoor and outdoor seating, corner visibility and a floor plan tailor made for a restaurant or cafe.
But before Hoodstarter approached him, the owner had legitimate concerns about developing the property, says Ley, or even finding a temporary tenant for the space. According to Ley and Berglund, even well-meaning property owners who care about their neighborhoods can be overwhelmed by the cost, time investment and risks associated with finding a commercial tenant or developing a space on their own.
And, counterintuitively, many owners prefer to leave their properties empty as commercial land values rise, in the hopes of cashing out as the market peaks. Hoodstarter’s success will depend on its ability to convince property owners that they stand to gain from filling vacancies now, not waiting to sell later.
If all goes well, the owner of the vacant South Minneapolis property may soon have a new tenant or buyer. Last fall, Hoodstarter held a Better Block
event at the site itself, continuing the conversation that began online.
According to Ley and Berglund, this hybrid model — using in-person events to publicize vacant properties and build support for the best usage ideas — could be a big component of Hoodstarter’s model going forward. But first, they need to fill some vacancies.