Detroit Startup Is Encouraging Residents to Invest In Their Own Neighborhoods
Though Detroit's economy is slowly beginning to rebound, the growth isn't happening fast enough for many of the city's residents. If the community-minded team behind the startup Cooperative Capital succeeds, it’s possible that Detroiters will be able to take matters into their own hands—and possibly even turn a profit.
Described as a “cooperative private equity fund,” Cooperative Capital invites users to pool their money and then make decisions on buying, restoring, and selling properties with an eye toward city restoration, community-building, and a return on investment. The minimum buy-in is $1000, which also gives the investor a vote in how the pooled money will be spent. (If they invest $3000, they get three votes.) A financial committee chooses the top five most promising opportunities, then tabulated votes determine the final project. If it passes a due diligence stage, where investors are likely to get at least a 6 percent annual return, the project will move forward.
Cooperative Capital also plans on offering the model for private businesses. A bookstore in need of funding, for example, might benefit from the cooperative.
The company believes that having members of a local community involved will create a self-rewarding loop of activity. By improving blighted properties, neighbors will see their own property values rise; by frequenting backed businesses, they stand a better chance of seeing a return.
The Detroit arm of the fund will launch within the next few months, with plans to expand to Flint, Lansing, and other Michigan cities in the near future. Eventually, the service could be available in Chicago, Oakland, and other major metropolitan areas, depending on local regulations.
[h/t Fast Company]