Send lawyers guns and money

The redevelopment of Money Island, New Jersey, will take plenty of professional help, construction materials, equipment and lots of money. Right now we are a blank canvas, the stipped down sleepy seafood landing port that has the potential to be a regional force in sustainable aquaculture in coming decades. With removal of the former residences, and more home demolitions likely over the next couple of years, the remaining tiny marina community and working waterfront are now just positioning with the next generation of users to build a sustainable future. We are pulling support from a range of sources: private aquaculture investors, government, people with recreation/tourism business interests and local business people making in-kind contributions of time and materials. Educational institutions and nonprofits continue to play a major role in ongoing activities but, so far, are not involved financially.

The legal format and operational plan that works best here is to form a series of limited partnerships for each project as it develops and then offer the stakeholders the option to convert to qualified small business stock if they want to stay for the long term. This effectively creates a community capital fund by pooling the resources of different stakeholders with widely different interests. The first stage typically offers a fast up-front tax shelter. The second format offers long term tax-free capital gains. Nonprofit and government stakeholders have their own well-defined requirements and goals. We are especially excited about the opportunity to offer local small business people the opportunity to be equity stakeholders here based on a contribution of material, work or equipment.

We plan to host a series of meetings soon that will be open to the public to discuss progress, upcoming projects and opportunities to get involved. Meanwhile, contact Tony to learn more about the progress.

*Guns of course are a sensitive topic and already a reader questioned my choice of the title phrase and some may not be familiar with the origin of the pop culture phrase. I intended the word “guns” as metaphorical for “equipment” as was integral to the post. But I do like a the brashness and tone of the current generation of the young environmentalists this week with a revolutionary spirit who do not agree to do things the docile compliant ways of the past. I’m not saying they should take up guns per se, but maybe Greenpeace isn’t so radical on a longer term perspective. If you actually consider the narcissistic context that Warren Zevon coined the famous phrase in his lyrics, it is antithetical to this use and most contemporary uses of “lawyers, guns and money”, especially by environmentalists and lawyers.

Social determinants of crowdfunded investment decisions

A new article published this week in the Journal of Business Finance and Accounting takes a step forward in the path that has been unfolding for those of us working at the intersection of community projects and private investments. The paper abstract says (emphasis added): “We investigate determinants of investment decisions in investment‐based (equity and bond) crowdfunding campaigns, using a novel investment‐, investor‐ and campaign‐level database, where equity refers to investments in entrepreneurial start‐ups and bonds to large real estate projects. We find that investors who have higher social interactions invest more. Social interactions are important in an equity crowdfunding context but do not affect participation in bond investments. This is consistent with the view that investors’ social networks help reduce information asymmetry. Women invest less in the riskiest (equity) investments but more in safer ones (bonds). These findings are better explained by differences in risk aversion than differences in overconfidence between men and women. Overall, the findings contribute to the understanding of how investment‐based crowdfunding can be a viable source of entrepreneurial finance and how entrepreneurs’ campaign decisions affect investor participation in this new form of entrepreneurial finance.”

What this means for us, simply, is that Baysave equity crowdfunding strategy should focus on men who are active is social media platforms or otherwise well-connected in their communities. Other lower risk debt-based projects like private mortgage might be more interesting to female and institutional investors.

This research finding appears to be consistent with earlier research and our own observations. Specifically, it addresses the ongoing conflict where the larger private investors want to discourage us from publicizing news of bayshore redevelopment while, in contrast, I see public media and social medial more frequently as a source of strength. Whenever publicly disclosed information is used against us in a marketing or legal situation, I hear a “told you so” from investors who prefer to remain private.

This is a useful reminder to us as we revise our 2018 strategic plan documents for 2019.

Crowdfunding for scientific and environmental projects

Since 2015, public media in Australia has covered the gradual transition of funding for scientific and environmental project to social media. ABC and NBC networks produced updates this week. ABC writes:

“The competition for research funding is driving some Australian scientists to crowdfunding. It can take up to a year for academics to find out if they’ve been successful in getting government grants. It’s highly competitive with the success rate for the Australian Research Council usually about 18 percent. But going cap in hand to the public, via the internet, isn’t a sure thing either.”

Crowdfunding has the potential of being faster than the grant process. But it has its own challenges. Baysave is also learning about crowdfunding; we’ve had some success and some learning experiences that were not immediately successful. In the long run, I suspect that both methods must be used in tandem for smooth operation in today’s environment.