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Umber Bawa is CEO and Founder of rabble, an impact investment platform that connects people with projects that strengthen communities. They use new rules passed by Congress that enable anyone to invest. Through rabble, people can invest in projects that align with their values.

Jeff Jetton: I recently read an interview that you gave and it sounds as if you take a DIY (Do It Yourself), that sort of ‘punk rock’ mantra, DIY-approach to the idea of investment…

Umber Bawa: Yeah, basically, the whole aesthetic of the Clash or the Ramones was that you don’t have to necessarily be the most talented musician. You need to have a message that’s powerful. And as long as it resonates with people they will be supportive. Essentially when you live in a society like we do, our tax dollars don’t necessarily fund the things that we support individually. For instance, more than 50% of our tax revenue goes to non-discretionary spending that US citizens have no say over. When you have a federal or state government that isn’t supporting the types of infrastructure, development, or public works projects that you you believe in, there’s a disconnect. If there are platforms like ours that exist, people can put their capital towards things they believe in. That’s the point of rabble. If it is a project like saving an historic restaurant in your community, or an art gallery, or rehabbing abandoned homes in Detroit, or renewable energy in your neighborhood, that’s what rabble is for. For people to put their capital in things they believe in. If you have enough of these types of projects they can come to life.

JJ: Social good or environmental good and making profit, essentially.

UB: Yes.

JJ: Here’s a question for you. I don’t want to get into details of prior legislation that existed, which has recently changed, because it was complicated and that was the problem to begin with. But I imagine that legislation that was put into place a long time ago, as a protectionist measure. Ostensibly to keep people from getting bilked. And now the SEC has changed those rules. So my question is, what is protecting the investor with platforms such as yours…

UB: Protection is good. A lot of people who are venture capitalists or institutional investors might decry that notion, but it is actually a good thing that we have institutions in place that protect people who are not deemed to be ‘sophisticated’. This… submitting something to the SEC to get qualified, requires a tremendous amount of disclosure. It’s not a free for all. It’s not like you can just list anything. Anything we list on the platform undergoes a tremendous amount of scrutiny. Financial scrutiny. We audit financials. We perform an analysis on the team, the economic characteristics of a neighborhood, the trajectory of a city. We require business plans and detailed pro formas. There’s a lot of disclosure but that is something my company takes on. We get these through the SEC and we make it available. It’s not willy nilly.

JJ: That’s what I figured. For me this is exciting. In the past I’ve only been able to invest in projects where I didn’t have to be accredited. I am not an accredited investor. I would say I’m savvy at this point, but not accredited. And that barrier has been there for the average person to invest the way wealthy people invest. And that’s a very classist mechanism for keeping rich people rich and the rest of us not.

UB: Exactly. One of the basic propositions of what we are doing, which comes from my background in renewable energy is, if you change who does the funding, you can change what gets funded. High net worth people, institutional investors, they have access to deals that have really high returns. So there are types of private equity deals or real estate deals that are more than 25% higher IRR. So as a result you get more condos, as a result you get more commercial space. You see what happened in Brooklyn where it’s just a bunch of condos. A Whole Foods, an Urban Outfitters and a bunch of condos. There are hundreds of thousands of projects out there that might have pretty good returns. Maybe not those 25% and higher returns. But maybe 18%, 15%, 12%, but because those institutional investors have the ability to put their money in projects that yield very highly, that’s where they put them. Because they want to make as much money as possible. They are only motivated by financial returns. But that’s not how the vast majority of humans are. Not you or me. Not the majority of people you talk to on the street. People care about their neighborhoods. They care about their local coffee shop or art gallery or whatever it is. They want to support those projects. If there is something that has social value or environmental value AND financial returns, and if you can get enough people to come in and pool their money together, you can change what gets developed. That is what rabble is trying to address. Creating a parallel economy where development isn’t only Whole Foods and Urban Outfitters and condos.

JJ: Tell me a little bit about the first project.

UB: The first project is being run by David Alade, Andrew Colom and Kimberly Dowdell, they run a private real estate fund in Detroit. Over the last couple of years they’ve raised over three million dollars to buy abandoned mansions from the city and from neighbors, they buy them from the city, renovate them and rent them out. In the process they are building really high quality stock of these beautiful historic mansions in Detroit. And in the process they are increasing property values in these neighborhoods, which is actually a good thing in Detroit. You’re able to increase the tax base in a city that desperately needs it. What Rabble is doing is creating a separate fund that is going to invest in Century Partners. The funds that people invest will be used to renovate thirty-one homes in three neighborhoods in the midtown and downtown areas of Detroit.

JJ: How much is Rabble raising?

UB: $550,000

JJ: So what is the minimum amount someone can invest?

UB: Now the minimum is $100 and the maximum is $50,000

JJ: That gives just about anybody the opportunity to invest.

UB: If you look at the returns of our projects, it’s not as if these things are concessionary. It’s not as if it has social good it has subpar financial returns. It has social good AND good financial returns. We are hoping to appeal to both high net worth folks as well as everyday people. It is a way that can invest without having to make that trade off.